Hilton profits steady as investment rises

Hilton profits steady as investment rises

Hilton Food Group's 2013 operating profit was "marginally below" last year's levels due to increased levels of investment in the UK meat business.

The company said operating profit dipped 0.7% to GBP25.8m (US$42.9m) in 2013. During the year, the company embarked on a number of strategic initiatives to position Hilton for future growth. These included the establishment of a joint venture in Australia with the country's largest retailer, Woolworths. Start up costs associated with this totalled GBP1.4m.

The group's net income in 2013 stood at GBP17.8m, 1.4% higher than in 2012. The bottom line was boosted by reduced debt levels and strong free cash flow, Hilton said.

Value sales rose 9.1% to GBP1.12bn. Value sales growth was supported by higher pricing and favourable currency exchange impact. Volume sales rose 2% with product launches in Holland and Denmark offsetting weak consumer spending power in Ireland and Central Europe.

Panmure Gordon analyst Graham Jones said that Hilton delivered a "solid" full-year performance. "Hilton delivered a solid profit performance, impressive cash generation and very significant business wins in 2013," he wrote in a note to investors.

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Hilton Food Group plc

A year of strategic delivery

2013 Highlights

Hilton Food Group plc, the specialist retail meat packing business supplying major international food retailers in thirteen European countries and Australia, today announces its preliminary results for the 52 weeks ended 29 December 2013.

 

Financial highlights

 

2013

52 weeks to

29 December 2013

 

2012

52 weeks to

30 December 2012

 

Change

 


 

Revenue

 

 

£1,124.8m

 

£1,031.0m

 

+9.1%


Operating profit

 

£25.8m

£26.0m

-0.7%


Profit for the year

 

£19.4m

£18.9m

+2.4%


Basic earnings per share

 

25.0p

24.9p

+0.4%


Closing net cash/(debt)

 

£4.9m

£(5.2)m



Dividends paid and proposed in respect of 2013

12.75p

12.0p

+6.3%

 

Strategic highlights

·    The joint venture with Woolworths Limited in Australia announced in January 2013 is performing well and in line with expectations.

·    The conversion of the Bunbury site in Western Australia, to increase retail packed meat production, is substantially complete.

·    In August 2013 Woolworths announced the construction of a new dedicated retail packed meat facility, near Melbourne in Victoria, due to commence production in 2015, which will be operated by our joint venture company.

·    In early December 2013 we announced a five year long term supply agreement with Tesco which is expected, on a progressive basis, to substantially increase Hilton's UK volumes.

Operational and financial highlights

·    Revenue growth of 9.1%, with increases in the UK, Denmark and Holland (the latter accelerated by new product launches). Revenue benefited in 2013 from the recovery of higher meat prices and favourable movements in exchange translation.

·    Volume growth of 2.0%, with new product lines introduced in Holland and continued growth in Denmark offset by continuing pressures on consumer spending, particularly in Ireland and Central Europe.

·    Operating profit of £25.8m only marginally below the previous year's level (2012: £26.0m) after bearing start-up costs of £1.4m in Australia.

·    Free cash flow of £17.0m, despite a higher level of investment in equipment and facilities, moving the Group into a net cash position at the year end.

·    A strong balance sheet with no gearing and interest cover at 29 times underpinning both future expansion and a progressive dividend policy.

 

Commenting, Robert Watson OBE, Chief Executive said:

"I am pleased to report that in 2013 Hilton made excellent progress in terms of implementing its future growth strategy, including the further development of our Australian joint venture and the new UK contract with Tesco. The Group has maintained a high level of investment in its meat packing facilities across Europe whilst realising the available opportunities to progressively and profitably expand its business. The strategic progress made during 2013 illustrates well the continued relevance and international transferability of Hilton's business model."

Original source: Hilton Food Group