The established markets of UK meat processor Hilton Food Group are under pressure, according to analysts, despite first-half results coming in above some expectations.

The company this morning (11 September) reported flat half-year profits and said it expects annual earnings to be “similar” to the year before.

For the 28 weeks to 15 July, Hilton booked net profit of GBP9.6m (US$15.4m), as it had a year earlier, while sales increased 9.4% to GBP543m

ShoreCapital analyst Darren Shirley said that while headline sales growth was “robust”, the primary driver of activity was the relatively new operation in Denmark, with revenues and volumes in Hilton’s established markets – the UK, the Netherlands and Sweden – “under pressure”.

Shirley cited pressure from “tough” economic conditions, the “relatively high price” of red meat, most notably beef, and “trading down by under-pressure consumers”.

Panmure Gordon analyst Graham Jones estimated average meat prices in the period increased by 8%.

“With consumer incomes remaining under pressure, this appears to have driven both falling volumes and down trading to less expensive meat cuts such as mince and burgers at the expense of joints/steaks etc,” he said in a note.

Like Jones, Investec analyst Nicola Mallard, cited the company’s balance sheet as one of Hilton’s strengths.

“Despite the recent investment in Denmark, net debt levels remain very comfortable,” she said. “During the half year, the group started to reduce debt and it stood at around GBP15m at the end of June, which is equivalent to just c.0.3x EBITDA. This leaves the group well-placed to undertake further projects with new customers should the opportunity arise.”

Shares in Hilton were down 5.8% at 288p at 16:25 BST.