Tesco meat packer Hilton Food Group has posted a 0.7% increase in volumes, driven by the introduction of new lines in Holland.
The group posted a 1.2% increase in operating profit, to £13.4m, on turnover up 9.4%, to £593.8m, in its interim results for the 28 weeks to 14 July 2013.
Its performance suggests Hilton has shrugged off any impact the horsemeat scandal had on the market (although Hilton was not itself implicated in the scandal).
Hilton’s underlying trading performance remained good despite “short-term industry issues in the UK and Ireland and weak macroeconomic conditions across most of our European markets”, it said in a statement this morning.
Turnover had benefitted from the recovery of higher raw material meat prices and the favourable impact of exchange rate movements.
Operating profit margin had, however, taken a hit, falling to 2.3% from 2.4% in the first 28 weeks of 2012. It reflected the impact of increased raw material prices within Hilton’s fixed packing rate contracts, it said.
Hilton was pleased to have achieved further growth despite challenging market conditions, said Robert Watson OBE, chief executive of Hilton Food Group. “Strategically, we continue to make strong progress.”
In Western Europe, operating profit grew 0.8%, to £12m on turnover up 10.2%, to £543.5m. Turnover and volume growth was achieved through product innovation and range extension, including new lines in Holland such as sliced products and pork strips.
Last month, Hilton announced the building of a new retail packing facility near Melbourne, Victoria in Australia, to be operated by its joint venture with Woolworths. It is expected to commence production in 2015. Earlier this year, the joint venture took over the operation of Woolworth’s Western Australian meat processing plant in Bunbury, near Perth.
“Our aim is to continue to extend the geographic reach of the Hilton model and we continue to look for new opportunities,” said Watson.
Hilton said pressure from tight consumer expenditure and high meat prices was expected to continue in Europe over the remainder of 2013 and the group would incur further start-up costs in Australia due to the Victoria facility. “The group nevertheless expects profits for the full year to be in line with the Board’s expectations, after factoring in the impact of the increased Australian start-up costs,” it said.