The board of directors at Bakkafrost P/F has postponed a proposed dividend payment announced last month until 25 August, 2020, citing the uncertainty caused by the ongoing COVID-19 pandemic as the reason for its decision.
In a statement announcing that it would now pull back the payment proposition, the Faroe Islands-headquartered salmon farming group said the global spread of the coronavirus had “greatly affected the salmon market,” particularly disrupting downstream supply channels and logistics.
The board of directors expects the level of uncertainty to be reduced by 25 August, when Bakkafrost is set to deliver its first-half 2020 results.
“This situation evolves continuously and creates significant uncertainty, which will most likely prevail for some time yet. The level of uncertainty has convinced the board of directors and the management of Bakkafrost that it is most responsible to shareholders, employees, and the [company] to postpone the decision regarding the dividend payment for 2019,” the statement said.
The payment, Bakkafrost added, could affect the company’s ability to make planned investments, in addition to its ability to continue producing salmon.
“It is important to ensure that Bakkafrost maintains the agility and financial strength to be able to continue the many planned investments in the cap-ex program. These investments enable our ambition for future growthm as well as being important for the recovery of the economy in the Faroe Islands and Scotland on the other side of the pandemic crisis,” the company statement said. “Bakkafrost has a vital role in the society and in ensuring sufficient food production for the world’s population. This role has never been more important than during the difficult times the world is facing at the moment. It is therefore important to secure continued high level of production and Bakkafrost has implemented a range of protective measures to safeguard the health and safety of the workforce.”
The statement also stressed that Bakkafrost has a very strong balance sheet and good access to capital.
In December 2019, the group’s bank facilities were refinanced, ensuring five-year facilities with banking groups Nordea, DnB, and Rabobank. These bank facilities amount to EUR 352 million (USD 387.2 million) plus GBP 100 million (USD 122.2 million, EUR 111.1 million), with the option for an additional EUR 150 million (USD 165 million).
By the end of Q4 2019, Bakkafrost’s net interest-bearing debt was DKK 1.02 billion (USD 150.4 million, EUR 136.7 million) and its undrawn credit facilities were DKK 2.47 billion (USD 364.1 million, EUR 331 million). At the same time, the equity ratio was 65 percent.
The resolution to postpone the proposition on dividend payments for 2019 has not altered Bakkafrost’s dividend policy, which is that 30 to 50 percent of earnings per share shall be paid out as dividends.
Bakkafrost’s annual general meeting will be held on 3 April, as previously announced.
Photo courtesy of Bakkafrost
