A contract to supply Tesco in the UK and new product lines in Holland drove first-half volumes up 4 per cent at Hilton Food Group (HFG). But sales were nonetheless flat, due to currency headwinds and lower meat prices. Start-up costs of £1.2m, relating to production in Australia and the UK, put further pressure on profitability, leaving group operating profit just 1 per cent higher at £13.6m.
Management also told us to expect flat net profit growth for the full year, due to ongoing currency headwinds, lower meat prices, constrained spending in western Europe and a slight delay in completing the overhaul of the processing facility at Huntingdon in the UK. This should be finished by the end of the current year, incurring start-up costs of £300,000 to £500,000 in the first quarter of next year. Meanwhile, a facility upgrade in Sweden is also on track to finish by the year-end, and a new meat-packing facility near Melbourne, Australia - undertaken by Hilton's joint venture with Australian retailer Woolworths - is under construction, with completion expected in the second half of 2015.