Hilton Food Group likely to be affected by horsemeat scandal

The analyst’s executive director Graham Jones said:“While no Hilton products have been caught up in the European horsemeat issue, we expect that consumer sentiment to beef could have been impacted short-term.”​

Jones added that 2012 was likely to prove a disappointing year from an earnings perspective. He forecast a 1.3% decline to 24.3p driven by a 4–5% impact from currencies and a big impact from consumer down-trading.

The past year had proved significant for the firm, said Jones, with the successful commissioning of the robotic store-order picking system in Denmark and the launch of a joint venture with Woolworths​ in Australia.

Horsemeat scandal​

Also, the horsemeat scandal across Europe had “reminded everyone of the value of high quality, traceable supply”.​

Moreover exchange rates had moved in Hilton’s favour.

Panmure Gordon forecast sales rising by 4.8% to £1,029M, despite a 4–5% impact from currency. Operating margins were predicted to fall from 2.6% to 2.5%, due to “significant consumer down-trading and the effect of rising prices on packing rate agreements”.​

Profit before tax was predicted to fall by 0.9% to £24.3M and earnings per share to fall by 1.3% to 24.3p.

“For a company with such attractive growth opportunities, strong balance sheet and impressive cash generation, we believe this is good value, particularly relative to its mid-cap peers,”​ concluded Jones.

Panmure Gordon’s advice on the firm’s stock was ‘buy’.

Hilton Food Group’s full year results will be published on Thursday March 28.