Hilton Foods results beat expectations as meat volumes rise

Full year results from Hilton Foods were better than expected but the retail meat packer said its forecasts for 2016 were unchanged for now.

Although volumes were up 5.5% to 244,140 tonnes of sausages, mince, steaks and other juicy cuts to thirteen European countries and Australia, sales for the 53 weeks to 3 January were just below flat at £1.1bn due to the strong pound weighing on revenues to the tune of 7.4%.

Pre-tax profit rose 11% to £28m and earnings per share by 10% to 27.5p, with the total dividend lifted 10% to 14.6p per share.

Cash generated from operations was ahead 10% to £45.3m, helping the group to a net cash position of £12.7m, compared to debt of £7.7m at end of 2014.

Looking forward, the company expects to increasingly benefit from the improved contract with Tesco and the projects with Woolworths in Australia.

Chief executive Robert Watson added: "We will continue to look for available opportunities to progressively and profitably expand the scale and scope of our operations as they arise using a business model that has over time proved to be successful, resilient, relevant and internationally transferable."

Broker Shore Capital was encouraged by Hilton's improved 2.6% EBIT margin from 2.4% the year before, noting that EBIT per kilo sold of 11.9p which compares with 11.3p.

Broker Peel Hunt upgraded to 'buy' from 'add' following recent weakness in the shares, which were trading on a p/e ratio of 17.3x to December 2016 falling to 16.4x the following year as the new projects come through.