9th Sep 2014 08:07
LONDON (Alliance News) - Hilton Food Group PLC Tuesday reported higher pretax profit for the first half of its financial year, as lower administration and finance costs offset a hit from the strength of sterling, and said its full-year result was likely to be flat on the previous year due to the costs of expanding its facilities.
The company, which packs meat for food retailers in Europe and Australia, reported a pretax profit of GBP13.1 million for the 28 weeks to July 13, up from GBP13.0 million a year earlier, mainly thanks to lower administrative expenses and finance costs.
It increased volumes to 121,832 tonnes, from 116,942 tonnes a year earlier, but lower meat prices and the hit from the strength of sterling meant revenue fell to GBP592.3 million, from GBP593.8 million. Its underlying profits were also hit by start-up costs for new facilities in the UK and Australia.
Hilton Food Group, which supplies retailers including Tesco PLC, Ahold of the Netherlands and Woolworths in Australia, said its capital expenditure in the first half was GBP21.3 million, up from just GBP7.2 million a year earlier due to the spending on the new facilities. Its borrowings, net of cash balances, were GBP5.6 million on July 13, up from GBP4.9 million on December 29, 2013.
It said its debt had only risen a little, despite the heavy capital expenditure, due to strong cash flow. It had therefore decided to increase its interim dividend to 3.8 pence, from 3.65p.
"There is good underlying momentum in the business. During the year we are progressing a major expansion of our UK facilities, the re-equipment of our facilities in Sweden and the development of a new facility in Victoria, Australia. Our aim is to extend the geographic reach of the Hilton model and we continue to look for new opportunities," Chief Executive Robert Watson said in a statement.
Looking ahead, the company said it expected consumers to continue looking for value, but said it was well equipped to deliver growth in such circumstances. It said in the first half of the year, its volumes grew as it started a new contract with Tesco and as recently introduced products performed well in the Netherlands.
"Looking ahead to the remainder of 2014, currency headwinds could well continue along with pressure from constrained consumer expenditure in Europe. With higher start-up costs the group is likely in 2014 to deliver levels of profitability similar to those achieved in 2013," it said.
"Hilton continues to explore further opportunities for geographical expansion and growth in its existing businesses through new product development and range extension," it added.
Hilton Food Group shares were down nearly 2% at 451.00 pence Tuesday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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