ii view: Hilton Foods to focus on 'resilient' core meat business

Full-year results to 28 December

• Currency adjusted revenue up 12% to £4.21 billion
• Adjusted pre-tax profit down 3% to £73.2 million
• Final dividend of 24.9p per share
• Total 2025 dividend payment up 1.4% to 35p per share
• Net bank debt down 4% to £127 million

Guidance:

• Continues to expect full year 2026 adjusted pre-tax profit of £60-65 million

Executive Chairman Mark Allen OBE said:

"Our core retail meat offering is a resilient business. Despite continued raw material inflation, the strength of our customer relationships and consistent delivery has underpinned our performance. 

"Our strong balance sheet provides capacity to invest for growth in a disciplined way. Importantly we remain committed to our progressive dividend policy.

"With a clear strategy, and strengthened leadership structure in place to execute, I am excited about the company's future."

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ii round-up:

Announcing the appointment of new CEO Mark Allen, Hilton Food Group (LSE:HFG) today detailed a new strategy to focus on its core meat and freshly prepared food businesses.

Improvement plans for the seafood and veggie businesses will be implemented, with the aim of increasing strategic options.

Shares in the FTSE 250 company rose 5% having almost halved over the course of 2025. That’s similar to fellow food business Tate & Lyle (LSE:TATE). The FTSE 250 index gained 9% last year. 

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

Currency adjusted revenues for the year to late December 2025 rose 12% to £4.21 million, driven by higher selling prices as the company passed on increased raw material costs. 

Adjusted pre-tax profits, including small previously sold businesses, fell 3% to £73.2 million, affected by reduced consumer demand for more expensive white fish and ongoing losses at the Dalco vegetarian business.  

A final dividend of 24.9p per share, payable to eligible shareholders on 26 June, takes the total payment for 2025 up 1.4% to 35p per share. 

Continued challenges for the Foppen, Seachill and Dalco businesses continue to underpin management’s expected decline in annual adjusted pre-tax profit this year to between £60 million and £65 million. 

An early year trading update is likely to be announced at the group’s AGM in mid-to-late May. 

ii view:

Started in 1994, Hilton today employs over 7,000 people across 21 plants serving customers in 21 markets across Europe, Asia Pacific and North America. Alongside focusing on the core meat and fresh food preparation businesses, group strategy will also look to expand geographically as well pursuing a progressive dividend policy.  

For investors, challenges for both seafood and the veggie business continue, with profits guided lower for the year ahead. Increased optionality for non-core businesses could eventually result in disposals which would reduce 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 should not be forgotten. 

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More favourably, a rejuvenated strategy is now being pursued, with the possible sale of non-performing businesses a possibility. Geographical expansion via partnerships in Saudi Arabia and Walmart in Canada are ongoing. Exposure to food is arguably broadly defensive as consumers must eat no matter what the economic backdrop, while a share price-to-net asset value (NAV) ratio comfortably below the three-year average may suggest emerging value.  

On balance, and despite ongoing risks, a forecast dividend yield in the region of 7% will likely interest income investors with an appetite for risk.

Positives:

• Geographical diversity
• Attractive dividend yield (not guaranteed)

Negatives:

• Uncertain economic outlook
• Subject to currency movements

The average rating of stock market analysts:

Buy