While the results covered the period before the horsemeat scandal hit the headlines in January, City analyst Shore Capital interpreted accompanying comments made by the Hilton Foods to mean that this issue was unlikely to have a major bearing on the group.
Shore Capital reported: “In the medium term, we also believe Hilton may emerge stronger from the current horse meat adulteration scandal, given its high level of integrity, the good traceability of its product and its focus on the fresh meat categories, which seem to be gaining share at the expense of frozen processed products and chilled and frozen prepared meals.”
Resource for future growth
The group’s robust financial position provides considerable resource for future growth, as and when opportunities arise, according to Shore Capital. Hilton currently supplies major international food retailers in 13 countries.
Its joint venture with food retailer Woolworths in Australia announced in January 2013 marked the group’s first expansion beyond Europe into the faster growing Asia Pacific region.
Hilton Food recorded earnings before interest and taxation of £26M, which was marginally up on the preceding year (£25.9M). Shore Capital noted that this performance was delivered during a period when the depreciation and amortisation charge declined from £16.9M to £14.4M.
In 2012 volumes of meat packed for Hilton’s customers increased by 5% – a similar percentage to its revenue increase – reflecting both the growth in its new business in Denmark and further growth in Central Europe.
For the 12 month reporting period to December 30 2012, it generated £20.5M in cash, despite maintaining a high level of investment in equipment and facilities, and a 72% reduction in net debt from £18.7M to £5.2M.
Hilton Foods invested £12.4M across all of its sites located in six countries across Europe, which employ around 2,000 people. The capital expenditure across the Group’s decentralised business structure was designed to drive efficiency gains, extend product ranges, while taking advantage of advances in packing technology.
Commenting on the results, Hilton Food’s ceo Robert Watson said: “I am pleased to report that in 2012 Hilton has delivered another resilient performance.
“The group has maintained a high level of investment in its meat packing facilities across Europe while exploring opportunities to progressively and profitably expand its business. Our joint venture with Woolworths in Australia represents the group’s first expansion beyond its European heartland and illustrates well the transferability of its business model.”
The group’s non-executive chairman Sir David Naish added: “Hilton’s growth prospects are encouraging. The short term economic outlook in our European markets, however, remains relatively challenging, continuing to feature both comparatively high prices for meat and other key basic foodstuffs and maintained pressure on consumer spending.”
Meanwhile, the Food Manufacture Group is staging a free, one-hour webinar on the lessons to be learned from the horsemeat crisis at 11am on May 16. More details are available here.