Shore Capital’s Clive Black and Darren Shirley said Hilton was a “high-quality company” with a “strong balance sheet and cash generation”. They revised up their 2016 current pre-tax profit forecast to £25.9M and believed ambitions to move into new markets remained intact.
The analysts were particularly optimistic of the company’s potential to make the most of a “strong relationship” with Dutch retailer Ahold, after it announced earlier this year it was in talks to merge with Belgian retailer Delhaize.
Capacity boost
In its trading statement published today, Hilton said western Europe continued to deliver good volume growth, with the UK in particular benefiting from both recent capacity expansion and lower than anticipated start-up costs.
The company has been redeveloping its facilities in Huntingdon, Cambridgeshire, to take on planned volume increases for Tesco. It is also midway through a reinvestment programme at its Swedish factory, where it is installing faster production lines.
According to the statement, central Europe trading has been in line with expectations, with volume growth particularly coming from the Baltic countries.
Meanwhile, it said its joint venture with Woolworths in Australia was “making excellent progress”.
Trading statement: key points
- Group financial position remains strong
- Well-placed to grow the business both domestically and overseas
- Good volume growth in western Europe
- Central Europe trading in-line with expectations
- Excellent progress made in Australia
It explained: “As reported at the half-year, the Victoria plant has successfully started production and we are pleased to confirm that it is meeting its roll-out schedule.”
Expectations met
The statement concluded: “The group’s financial position remains strong with the group continuing to generate cash in-line with the board’s expectations, leaving Hilton well-placed to continue to explore opportunities to grow the business in both domestic and overseas markets.”
Black and Shirley said: “With no debt forecast at December 2015 and cash balances forecast to rise to about £31M by September, Hilton Foods has the balance sheet to support growth.”
They added: “We long held the view that Hilton Foods is a high quality company; we have already highlighted the strong balance sheet and cash generation – and we also point to very well invested facilities and the ambitious management team.”
Shore Capital repeated its ‘buy’ advice on Hilton’s stock.
The trading statement covered the period from July 13 to date.