- Collaboration expands Hilton’s global reach
- First of two agreements teased with first half results
- Hilton’s shares down 55% year-to-date
2022 has proved a bruising year for meat, fish and vegetarian meals supplier Hilton Food (HFG), whose shares have fallen 55% in the wake of two profit warnings induced by raw material price inflation and cost-of-living pressures.
But there was some positive news for investors to get their teeth into today as the company announced its entry into South East Asia through a strategic collaboration with Country Foods, one of Singapore’s largest food manufacturers and importers.
Shares in the FTSE 250 firm improved by 4p to 525p on the first of two potential partnerships teased at the time of Hilton’s first half results.
And broker Shore Capital said the Country Foods tie-up should remind investors of ‘the functions and capabilities that this hybrid high-quality business has to deliver proper long-term value to shareholders through its multi-protein, multi-channel, multi-functional strategy’.
WHY IS THE COUNTRY FOODS DEAL SIGNIFICANT?
For Hilton Food, which operates from technologically advanced food processing plants across Europe, Asia Pacific and North America, the partnership provides access to channels and countries already supplied by Country Foods and expands the group’s global reach to more ravenous consumers.
Set to begin in the first quarter of 2023, the partnership will allow Singaporeans to buy ‘high quality, good value protein products produced from Hilton’s global manufacturing sites, including: seafood, slow cooked meats and Australian beef, lamb and pork products’, said the company.
The collaboration will also see the Hilton Services division provide technology products and support from its ‘world class model of sustainable, highly automated manufacturing and logistics practices’.
CATERING FOR GROWTH
Chief executive Phillip Heffer insisted the Country Foods collaboration marks ‘another step forward in our plan to grow our global footprint and diversify our business across Asia and internationally.
‘With our extensive range of red meat, seafood, sous vide, vegan and vegetarian products, we are well placed to cater for the growing demand for high quality, affordable protein products in Singapore and beyond.’
THE SHORE CAPITAL VIEW
Shore Capital is waiting for the financial details of the deal before updating its forecasts for 2023. That said, it warmly welcomes ‘another addition to the group’s high quality multi-protein growth model, which we believe absolutely has a place in the future’.
The broker pointed out that the partnership will permit Singaporeans, ‘alongside their Australian and New Zealand nearish neighbours, given the expansive geography in this part of the world compared to the small UK, to experience the amazingly accurate, consistent and high-quality private label/B2B Hilton assortment, which involves seafood, slow cooked meats, and what is stated as Australian beef, lamb and pork products.
‘In time, we sense, this may also involve meat-free products noting that Singapore is at the forefront of licensing cell-based protein, where Hilton has a toe in the water with its investment in Cell-Ag.’
