Last year was all about investment at Hilton Food Group (HFG). The meat processor more than doubled capital spending to £43.3m as it developed two meat-processing facilities in Australia. It also expanded its UK operations following a long-term supply agreement with Tesco (TSCO), under which volumes supplied by Hilton will increase materially.
The start-up costs in the UK were higher than expected, but the new production lines are now fully commissioned. In Australia, the first meat-processing facility was completed on time, while the second factory in Melbourne will be launched in the third quarter. All three projects will increase volumes significantly.
That's good news given the challenges in some of Hilton's markets. Last year, group volumes rose 4 per cent, but revenue dipped 2 per cent due to lower meat prices in the deflationary European market and the strong pound: two-thirds of operating profit is earned in currencies other than sterling. These top-line pressures make it all the more impressive that operating profit edged up 1 per cent to £26.1m, helped by a higher margin, lower costs and a contribution from the Australian business.
Peel Hunt expects adjusted pre-tax profit of £26m this year, giving EPS of 26p, up from £25m and 25p in 2014.
| HILTON FOOD GROUP (HFG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 424p | MARKET VALUE: | £ 308m | |
| TOUCH: | 420-428p | 12-MONTH HIGH: | 534p | LOW: 342p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 76p* | NET DEBT: | 13% | |
| Year to 28 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 0.86 | 22.2 | 22.6 | 10.2 |
| 2011 | 0.98 | 24.5 | 24.7 | 11.1 |
| 2012 | 1.03 | 24.7 | 24.9 | 12 |
| 2013 | 1.12 | 24.9 | 25.0 | 12.75 |
| 2014 | 1.10 | 25.2 | 25.0 | 13.3 |
| % change | -2 | +1 | - | +4 |
Ex-div:28 May Payment:26 Jun *Includes intangible assets of £12.5m or 17p a share | ||||
