Europe’s largest red meat packer by turnover is based in Huntingdon and supplies major retailers such as Tesco, Ahold, Albert Heijn and ICA.
Lines include roasting joints, steaks, chops, minces and value-added products such as barbecue ranges, marinated meats and meat cuts with serving sauces.
Analysts Clive Black and Darren Shirley at Shore Capital estimated that Hilton would record £952m in total sales in 2011 (as against £864m in 2010) and predicted earnings before interest and tax of £25.8m, up from £23.3m last year.
“Raw materials are, not surprisingly, higher than the prior year, but we sense that Hilton has the process and practice to deliver an orderly margin performance,” they said.
Challenging conditions
The analysts interpreted Hilton’s mention of “challenging conditions” in some markets to refer primarily to the UK, where they said negative sales volumes had been seen across the industry in five of the first six months of 2011.
“With Tesco ... as its client in the UK, Hilton will have depended more than ever on pricing to sustain revenue growth,” said Black and Shirley.
“In our view, market conditions in the Republic of Ireland also remain challenging in 2011, particularly from the second quarter. But to its credit, Hilton states today that it is pleased with the 'resilience' of its performance.”
Hilton reported strong growth in western Europe, due to an economic recovery in Sweden and the opening of a new €22m (£19.3m) facility to supply the Coop in Denmark.
The firm said it had also continued to grow business abroad in countries such as Estonia, via retailer Rimi, with whom it has just recorded its first full year of sales.
Strong management
Hilton predicted that trading during the rest of 2011 would remain challenging, as European countries recover economically at different speeds.
Despite noting Hilton’s relatively low return on sales, Shore Capital singled out the firm’s “strong management … and potentially exciting long-term growth strategy”.
“We see considerable opportunity for Hilton to follow Ahold (to the US) or Tesco to the Near and Far East. Never mind exploring other markets such as Germany and Finland to name but two,” said Black and Shirley.
Panmure Gordon analyst Graham Jones said that Hilton’s trading statement showed good progress given difficult trading conditions in some markets.
“We expect Hilton to see the benefit of its Danish investment more clearly in the second half of 2011 and 2012, and the company continues to look for further growth opportunities,” he said.
“Clearly trading conditions in western Europe remain difficult, but we believe Hilton is better placed than most to deliver against expectations.”