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.”