FDBusiness.com

Hilton Food Group, the leading European specialist retail meat packing business supplying major international food retailers, has reported that its underlying trading performance has remained good for the 28 weeks to 14 July 2013, despite the impact of short term industry issues in the UK and Ireland and weak macroeconomic conditions across most of its European markets.

Turnover rose by 9.4% to £593.8 million as the group benefited from the recovery of higher raw material meat prices and the favourable impact of exchange rate movements. Volumes increased by 0.7%, reflecting the introduction of new product lines in Holland, partly offset by continuing pressure from higher raw material meat prices on consumer demand.

Operating profit for the first 28 weeks of 2013, at £13.4 million, was 1.2% ahead of the corresponding period last year, despite the impact of the initial start-up costs in Australia which reduced operating profit by 3.8%. The operating profit margin was 2.3%, compared with 2.4% in the first 28 weeks of 2012, reflecting the impact of increased raw material prices within Hilton’s fixed packing rate contracts.

The broad spread of the group’s operations initially across Europe and more recently into the Asia Pacific region represents a material strength, in terms of progressively reducing Hilton’s dependence on any one national economy, particularly during less predictable economic times.

Further turnover and volume growth was achieved in Western Europe, driven by product innovation and range extension. Turnover rose 10.2% to £543.5 million but operating profit was flat at £12 million. Operating profit and turnover were also flat at £1.4 million and £50.3 million respectively in Central Europe.

In Australia, Hilton Food Group is involved in a joint venture with Woolworths. In May 2013 the joint venture company took over responsibility for the operation of Woolworth’s Western Australian meat processing centre in Bunbury, near Perth. The conversion of this facility to enable a substantial increase in retail packed meat production is proceeding to plan, with increased retail packed volumes scheduled for late 2013 and early 2014. The joint venture also plans to establish a purpose built retail packing facility near Melbourne in Victoria which is expected to commence production in 2015.

Hilton continues to invest in all its European facilities to ensure that it can achieve low unit costs and competitive selling prices at increasingly high levels of production throughput. Capital expenditure in the period was £7.2 million against £4.8 million in the corresponding period in 2012.

Pressure from tight consumer expenditure and high meat prices is expected to continue in Europe over the remainder of 2013 and Hilton will incur further start-up costs in Australia. The Group nevertheless expects profits for the full year to be in line with expectations, after factoring in the impact of the increased Australian start-up costs. Hilton is continuing to explore further opportunities for geographical expansion and growth in its existing businesses through new product development and range extension.