UK: Hilton shares slide on "challenging" conditions, FX worries
Hilton Food Group said its first-half performance was "in line" with expectations but warnings over currency exchange and "challenging" consumer sentiment prompted shares i the UK meat packer to slide.
Shares in Hilton were down 4.08% to 482.98p this morning (17 July). The company said its performance in the 28 weeks to 13 July was hit by "challenging conditions" for the consumer and the appreciation of the sterling.
However, Hilton said its performance remained in line with expectations as "close co-operation" with retailers allowed the firm to grow volumes.
The company said a new supply deal with Tesco increased UK volumes while NPD boosted Dutch sales and capacity expansion benefited Swedish revenues. Progress is also being made in Australia through Hilton's joint venture with Woolworths Ltd.
"The group's financial position remains strong and Hilton continues to explore opportunities to grow the business in both domestic and overseas markets," Hilton said.
Shore Capital analyst Darren Shirley said the performance was "encouraging" but he reduced his forecasts due to currency headwinds.
"Against what remains a tough consumer backdrop, Hilton Foods' operations continue to trade robustly, supported by the capital investment evident across the group, which we view as encouraging. However, the headwinds from currency have strengthened through H1," he wrote in an investor note. "It will be no surprise therefore that we have nudged down our forecasts post today's update, lowering our FY2014 core pre-tax profits forecast by GBP0.5m, or 1.8%, to GBP26.6m."
Hilton Food Group plc 17th July 2014
TRADING STATEMENT FOR THE 28 WEEKS ENDED 13th JULY
Hilton Food Group plc, the leading specialist retail meat packing business supplying major international retailers in Europe and Australia, provides its Trading Update for the 28 weeks ended 13th July.
During the period, the Group's performance has been in line with the Board's expectations. As anticipated, challenging conditions for the consumer have been experienced in some countries and the continuing appreciation of sterling against a number of the currencies in which Hilton trades will have an effect on our results, as reported in sterling. Meanwhile we have continued to grow the business,through additional volumes and close cooperation with our retail partners.
In Western Europe we have made good progress against a backdrop of lower raw material prices. In the UK, under our new agreement with Tesco, volumes have continued to build towards anticipated levels. In the Dutch market, where the economy has been subdued, we are benefiting from new product lines introduced in 2013. In Sweden, development work to renew facilities and extend capacity is progressing well. The Irish business, as expected, remains constrained by local conditions, though we are well placed to support business growth once the economy improves. In Central Europe, we continue to work closely with our customers across seven countries to support business development.
In Australia, development work by the Joint Venture at Victoria is proceeding in line with the agreed plan, with construction well underway.
The Group's financial position remains strong and Hilton continues to explore opportunities to grow the business in both domestic and overseas markets.
The Group expects to publish its Half Year results for the 28 weeks ended 13th July 2014 on 9th September 2014.
Original source: Hilton Food Group
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