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Hilton Food invests in expansion

The food producer has been spending on diversification by both product and geography
Hilton Food invests in expansion

Hilton Food Group (HRG) has been investing heavily to diversify its revenue streams by product type and geography, which included ploughing cash into the new Australian facility in Brisbane, a fresh food factory in central Europe, and UK capacity expansion during the first half. Increased capital expenditure pushed the group from a £5.8m cash position to net debt of £98.9m. Chief executive Philip Heffer said the company is “laying down assets to support our strategic development”, and that investment levels will start to fall in 2020, with net debt expected to come down in 2022.

IC TIP: Buy at 985p

Varying the product range helped to support the 6.8 per cent increase in volumes sold to 193,608 tonnes. The investment in vegetarian product manufacturer Dalco completed during the period, as did the acquisition of sous vide manufacturer HFR Food Solutions. In June, Hilton became the sole provider of packed red meat to Tesco (TSCO) in the UK, which analysts think has the potential to feed through to improved forecasts after this year. 

Analysts at Numis forecast adjusted pre-tax profits of £48.5m in 2019, giving EPS of 44.7p, increasing to £54.1m and 49.4p in 2020.

HILTON FOOD GROUP (HFG)  
ORD PRICE:985pMARKET VALUE:£805m
TOUCH:985-993p12-MONTH HIGH:1,096pLOW: 855p
DIVIDEND YIELD:2.2%PE RATIO:26
NET ASSET VALUE:214p*NET DEBT:54%**
28 weeks to 14 JulTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201886421.020.05.6
201991219.917.46.0
% change+6-5-13+7
Ex-div:31 Oct   
Payment:29 Nov   
*Includes intangible assets of £69.8m, or 85p a share **Does not include lease liabilities of £1.6m