Hilton Food hails uplift from Tesco contract

13-May-2014 - Last updated on 14-May-2014 at 10:15 GMT

Related tags Republic of ireland Contract

Hilton Food Group has invested in production to help handle the uplift in demand from the deal

Hilton Food Group reported rising volume sales as a result of the contract with Tesco it signed in December last year in its interim statement.

In the statement on the period from December 30 to date, issued today (May 14), the international retail meat packing business, stated: “In the UK, where we signed a new agreement with Tesco at the end of last year, volumes have started to build towards anticipated levels …”

However, Hilton incurred start-up costs associated with the new agreement in the region of £1M in the year.

Uplift in demand

The firm invested £22M at its UK base near Huntingdon, Cambridgeshire, to increase the number of its facilities from three to four to help handle the uplift in demand from the deal. Its partnership with Tesco is scheduled to run until February 2019.

Performance for the interim period had been “in line with the board’s expectations”, with continuing growth aided by the development of business in existing markets, according to the company.

In the Dutch market, it was benefiting from additional production lines installed in 2013, despite tough economic conditions, it said. And in Sweden, work to renew facilities and extend capacity was on track, it said, adding that business in Central Europe had performed in line with expectations.

In Australia, development work at Victoria was proceeding as expected and it had continued to build volumes at Bunbury, it confirmed.

‘Challenging conditions’

However, it warned: “As anticipated, challenging conditions for the consumer have been experienced in some countries and the recent appreciation of sterling against a number of currencies in which the group trades has impacted the group's results reported in sterling.”

Progress in the Republic of Ireland had been tough, it claimed.

Hilton said it would continue to explore opportunities to grow the business in both domestic and overseas markets.

At the end of March, the firm reported pre-tax profit down 0.8% to £25.8M in the 52 weeks to December 29, but this had included a hit from the start-up costs.

It also posted sales up 9.1% and at the time, Graham Jones, executive director of equity research at City analyst Panmure Gordon, claimed it was set for “significant earnings growth”.