With lockdown forcing people to stay at home and rely on their own culinary abilities, the rise in home consumption proved a boon for Hilton Food (HFG). Amid the switch from restaurants to supermarkets, the meat packaging company saw volumes sold jump by almost a quarter year-on-year in the six months to 30 June, to 237,340 tonnes.
Covid-19-related costs – such as implementing stricter cleaning regimes – did push the adjusted operating margin down 0.4 percentage points to 2.5 per cent. But adjusted operating profit still climbed by a fifth at constant currencies to £31.5m.
The bulk of the group’s earnings comes from its European operations and 10 per cent volume growth benefitted from an agreement struck last year to supply Tesco (TSCO) with all of its own brand packaged red meat. But the Australasian business is also growing fast with a new processing facility in Australia allowing Hilton to meet higher demand.
Having operated in Australia via a joint venture (JV) with supermarket chain Woolworths since 2013, the group spent £36m to purchase the JV’s two processing facilities and take full control. Alongside investments in new plants in Belgium and New Zealand, this meant net debt surged by over half from the December year-end position to £132m. But operating cash almost tripled versus a year earlier, to £53m, and Hilton has increased its interim dividend.
House broker Numis anticipates full year adjusted operating profit of £64m – up from £55m in 2019 – rising to £74m in 2021.
| HILTON FOOD (HFG) | ||||
| ORD PRICE: | 1,222p | MARKET VALUE: | £ 1.0bn | |
| TOUCH: | 1,210-1,222p | 12-MONTH HIGH: | 1,352p | LOW: 711p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 239p* | NET DEBT: | £302m | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 0.91 | 19.9 | 17.4 | 6.0 |
| 2020 | 1.26 | 24.0 | 22.3 | 7.0 |
| % change | +39 | +21 | +28 | +17 |
| Ex-div: | 29 Oct | |||
| Payment: | 27 Nov | |||
| *Includes £69m in intangible assets or 84p a share | ||||
