Hilton Food Group invests £21.3M to build capacity

Major capital expenditure programmes are currently underway to modernise the Hilton’s Huntingdon site and to extend its capacity to service a new Tesco contract, and at Vasteras in Sweden, to modernise the site and improve operational efficiency.

£21.3M capital expenditure​

Capital expenditure was £21.3M, compared with £7.2M over the same period in 2013, reflecting the start of the major capital expenditure programmes at Huntingdon and Vasteras.

Hilton, which operates in markets across the globe, reported further volume growth in western Europe, despite continuing weakness in consumer spending, with UK volumes building following the start of the Tesco contract and new products performing well in Holland. Globally, its volumes were up by 4.2% to 121,832t.

While turnover at £592.3M was slightly down (0.3%) compared with the same period last year, which it attributed to adverse currency movements and lower raw material prices,  operating profit improved 1.1% to £13.6M.

It reported that strong cash generation had enabled major capital reinvestment programmes in the UK and Sweden with only a limited increase in net debt.

‘Major expansion of UK facilities’​

Commenting on the results, Robert Watson, Hilton’s ceo said:“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.”​

Looking ahead, it identified one of the major risks for the business to be its dependency on a small number of customers, which exercise significant buying power and influence.

New Tesco contract​

In western Europe, operating profit was £14.8M, compared with £14.6M in 2013 on a turnover of £545.8M (£543.5M). Volume growth in the region was 5.4%, driven by the start of the new Tesco contract in the UK, product innovation and range extension.

It noted, however, that turnover growth was only 0.4%, reflecting both the effect of lower raw material meat costs on its ‘cost-plus’ contracts and the impact of unfavourable exchange rate movements.

Looking ahead to the remainder of 2014, Hilton said currency headwinds could well continue along with pressure from constrained consumer expenditure in Europe. With higher start-up costs, it said the Group was likely to deliver levels of profitability in 2014 similar to those achieved in 2013.