- Full year guidance cut
- Robust first half
- Inventory build ahead of Christmas
Meat and fish packing business Hilton Food (HFG) slumped as much as 19% despite reporting a robust first half after flagging temporary headwinds in seafood and lowering full year profit guidance to below consensus expectations.
If the losses hold it will mean the shares have lost around a quarter of their value so far in 2025 compared with a 3% gain the mid-cap FTSE 250 index.
CEO Steven Murrells commented: ‘Whilst we have faced market-driven pressures and some specific operational challenges in seafood, we have responded with agility and continue to have a strong platform in place for future growth.’
INVENTORY BUILD
Revenue for the six months to 30 June increased 7.6% to £2.09 billion or 10.4% in constant currencies, driven by ‘significant’ raw material inflation across all markets.
Despite higher prices, volumes increased 2.5%, outpacing the wider meat market, with notable strength in the UK where volumes grew 1.7% against a market decline of 2.7%, highlighting the group’s defensive qualities.
Adjusted operating profit was up 1.9% in constant currencies to £46.6 million, less than volume growth due to softer demand in seafood and disruptions due to regulatory restrictions in exports to the US.
Given reduced availability the group has proactively built inventory to secure product ahead of the peak Christmas season, resulting in a £52.2 million working capital outflow. This means net debt increased to £202.4 million from £131.1 million in December 2024.
Lower than anticipated profitability prompted management to guide for 2025 pre-tax profit to be in the range of £76.8 million to £81 million, below the current consensus forecast of £80 million.
FORECAST DOWNGRADES
Panmure Liberum lowered its 2025 pre-tax profit estimates by 3.5% to the low end of the guidance range and implemented shallower cuts to its 2026 and 2027 estimates.
Darren Shirley at Shore Capital nudged down his 2025 pre-tax profit forecast by around 3% to £78.2 million but maintained his positive view on the outlook.
‘With strategic investment continuing in future new markets in the Middle East (H2 FY26F) and North America (H1 FY27F), we see much to like in Hilton Foods at attractive valuation multiples,’ said Shirley.
