ii view: Hilton Food shares rocket amid profit optimism

First-half results to 28 June

• Currency adjusted revenue from continuing operations up 12% to £2.29 billion
• Adjusted pre-tax profit down 5% to £32.8 million
• Interim dividend unchanged at 10.1p per share
• Net bank debt of £194.4 million excluding lease liabilities, up from £126.7 million in late December

Guidance:

• Now expects full year adjusted pre-tax profit of between £66 million and £71 million, up from a previous £60-65 million

Chief executive Mark Allen OBE said:

"This has been a period of encouraging progress across the Group. Having set out the conclusions of our strategic review earlier this year, we continue to innovate and deliver for our customers. We delivered good overall trading performance in meat and fresh prepared food, and we continue to drive opportunities to maximise performance and growth from our core operations.

"Longer-term, it is the commitment of colleagues, the strength of our customer relationships and leadership in red meat which will continue to underpin our medium-term growth objectives."  

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ii round-up:

Hilton Food Group (LSE:HFG) today raised forecasts for annual profit as a transformation plan to refocus on core meats and freshly prepared foods continued to progress.

With the July sale of the Dalco veggie business removing related losses, Hilton now predicts annual adjusted group profit of between £66 million and £71 million. That’s up from a previous £60-65 million estimate. Challenges emanating from the non-core seafood business largely drove a 5% drop in first-half adjusted profit to £32.8 million.   

Shares in the FTSE 250 company rose as much as 16% in UK trading having almost halved over the course of 2025. Takeover target Tate & Lyle (LSE:TATE) has soared by nearly 50% so far in 2026. The FTSE 250 index has gained by close to 9% year-to-date.

Hilton processes and packages foods from red meat to fish using automated facilities and robotics for customers including Tesco (LSE:TSCO) and Dutch Belgian retailer Koninklijke Ahold Delhaize NV (EURONEXT:AD).

Revenue in this latest half-year to late June climbed 12% to £2.29 billion, pushed by higher prices paid for raw materials like meat. Food processing volumes for the period rose 2.1% to 258,729 tonnes.

As well as a push to increase strategic optionality for non-core businesses such as its Seachill and Foppen seafood businesses, geographical expansion is being pursued via relatively new partnerships with the National Agriculture Development Company in Saudi Arabia and Walmart Inc (NASDAQ:WMT) in Canada.

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An unchanged interim dividend of 10.1p per share is payable to eligible shareholders on 27 November.

Ongoing capital expenditure of around £100 million on new plants in Saudi Arabia and Canada pushed group net debt to £194.4 million from £126.7 million in late December.

Management continues to expect the group’s ratio of net debt to adjusted profit to remain comfortably within its 1 to 2 times target range as of year-end.  

The joint venture in Saudi Arabia is expected to go live in late 2026, with the Canadian plant due to launch in January 2027. Both are expected to contribute towards 2027 earnings.

A third-quarter trading update is likely to be announced mid-November.

ii view:

Started in 1994, Hilton Food Group today employs over 7,000 people across 21 plants serving customers in 21 markets across Europe, Asia Pacific and North America. Asia Pacific and its major focus on Australia and New Zealand generated most sales in 2025 at 37%. That was followed by the UK at 32%, the Netherlands 13%, and other European nations the balance of 18%.

For investors, challenges at the seafood businesses continue, with the area remaining a work in progress for management. A potential sale of those operations will further reduce product diversity. Soaring energy prices pressuring consumer incomes could eventually result in reduced demand for already expensive meat products, while operational risks such as a previous fire at the group’s plant in Belgium cannot be forgotten.

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On the upside, a rejuvenated strategy is being pursued, with a possible sale of the seafood business also potentially reducing losses. Geographical expansion also includes planned growth of its fresh food processing plant in Poland. Exposure to food is arguably broadly defensive as consumers must eat no matter what the economic backdrop, while an estimated share price-to-net asset value ratio comfortably below the three-year average may suggest emerging value.  

For now, and while risks remain, an ongoing transformation plan and forecast dividend yield of over 5% will likely remain attractive to more speculative investors.

Positives:

• Geographical diversity
• Attractive dividend yield (not guaranteed)

Negatives:

• Uncertain economic outlook
• Subject to currency movements

The average rating of stock market analysts:

Buy