Nordic Credit Rating has lowered its long-term issuer rating on Norway-based Lerøy Seafood Group ASA to 'BBB' from 'BBB+'. The outlook is stable. At the same time, the short-term issuer rating has been lowered to 'N3' from 'N2' and the senior unsecured issuer rating to 'BBB' from 'BBB+'.
Rating rationale
The downgrade reflects higher than expected financial leverage following a prolonged period of operating and financial performance below NCR's forecasts, as well as limited visibility of a material improvement in credit metrics over the near to medium term amid continued sector uncertainty and volatility. Weak salmon prices continue to pressure Lerøy's operating margins and cash flow. As a result, we now forecast Lerøy's funds from operations (FFO) to net debt will only marginally improve to above 40% in 2026 and around 45% in 2027 and 2028, compared with above 70% in our previous forecast.
Lerøy benefits from a strong market position in salmon farming and a vertically integrated business model covering farming, wild catch, processing and distribution. This supports scale, market access and some earnings diversification, providing resilience and strategic flexibility.
This is offset by structurally high earnings volatility in the salmon farming sector, where profitability is sensitive to small changes in prices and biological outcomes. Environmental and disease-related challenges also continue to weigh on profitability, as high costs for treating sea lice and diseases require ongoing investment in new farming technology. This limits cash flow visibility and reduces the predictability of credit metrics, particularly during weaker market conditions. These factors have contributed to volatile EBITDA margins and credit metrics. As a result, NCR has revised its forecast to reflect a materially weaker credit trajectory than previously assumed.
Stable outlook
The stable outlook reflects our view that Lerøy Seafood Group's credit profile will gradually strengthen from cyclical lows as salmon prices recover and biological conditions stabilise, supporting improved profitability. We expect leverage to remain contained, as the company can fund investments with internally generated cash flow rather than additional debt. Consequently, we expect FFO to net debt to improve to above 40% in 2026 and 2027, driven by stronger profitability and cash flows. We also assume that regulatory changes will not significantly affect the company's operations.
We could raise the rating to reflect funds from operations (FFO)/net debt above 50% and net debt/EBITDA below 1.7x over a protracted period, or increased stability in salmon prices and EBITDA margins due to stability in supply and fish health. We could lower the rating to reflect FFO/net debt below 35% over a protracted period, reduced salmon prices due to lower demand for Atlantic salmon, or increased biological problems such as disease and sea lice.
Relevant research
- Structural constraints driving salmon prices, 10 Mar. 2026.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB | BBB+ |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N3 | N2 |
| Senior unsecured issue rating: | BBB | BBB+ |
Contacts:
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.