20th May 2024 09:40
(Alliance News) - Hilton Food Group PLC's trading update confirms the continued recovery of its Seafood business and opportunities for further growth, analysts on Monday said.
Ahead of Monday's annual general meeting, the Huntingdon-headquartered food packaging company said trading in 2024 to-date has been in line with expectations, with volumes and sales ahead of the same period last year.
This was despite sales growth in some markets being impacted by lower raw material prices, it added.
"The business remains well-positioned for the year ahead despite the continued challenging market environment and economic conditions," Hilton Food said in a statement.
"Short and medium-term growth prospects are underpinned by the strength of our multi-category offer and continued progress in our UK Seafood business," the company added.
In UK & Ireland, both volume and revenue are ahead of last year. In Europe, the core meat and easier meals business continues to perform well, with volume and revenue ahead of last year, the company added.
In Asia Pacific, Hilton Food reported more "normalised" volume growth, as expected.
Hilton Food said it continues to build its long-term partnership with Walmart in Canada and remains on track for the 2027 launch of its multi-protein facility.
Panmure Gordon analyst Sean Kealy noted that "six weeks after posting strong [full-year] results that confirmed delivery of a recovered UK Seafood division and refocused the story on growth, Hilton Foods has confirmed volume growth in all markets as the impacts of food price changes in the last few years settle down."
He thinks deflation in APAC will naturally support volume growth, while the company continues to be on-track for a 2027 launch of its Walmart Canada facility.
"The company has visible growth in the new Canada contract, a wide-open opportunity for further contract wins in both new and existing markets," he added.
"While nothing changes with this update, we reaffirm that we believe the shares remains cheap for the growth opportunities ahead of the company," Kealy added.
Panmure Gordon reiterated a 'buy' recommendation and 1,030 pence share target price.
Charles Hall at Peel Hunt said it was a "good start to the year, with volumes continuing to improve as inflation eases back and consumer confidence grows."
Hall highlighted the "confident outlook," and a pick up in return on capital employed to 18.3% from 14.8% a year prior.
"This improvement should improve confidence in the quality of earnings and the long-term proposition," he felt.
Peel Hunt has a 'buy' rating on Hilton Food and a 1,030p share price target.
Shares in Hilton Food rose 0.4% to 943.65p each in London on Monday morning.
By Jeremy Cutler, Alliance News reporter
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