Hilton Foods saw profits fall in the first half of the year as strong meat sales failed to compensate for disruption in its fish business.
The company’s revenue grew 7.6% to £2.1bn in the 26 weeks to 29 June, driven by volume growth and “significant” raw material inflation across all markets.
Meat performed best with retail and convenience seeing volume growth of 3.1%, ahead of the rest of the market.
However, high inflation meant seafood sales fell in the UK, while Foppen, its smoked salmon business, was hit by regulatory restrictions on shipments to the US from its Greek facility.
To maintain supply, Hilton has temporarily moved production to its facility in the Netherlands and is in talks with the US government about corrective steps.
But the disruption in its fish business dragged down pre-tax profits by 4.7% to £24.3m.
“Whilst we have faced market-driven pressures and some specific operational challenges in seafood, we have responded with agility and continue to have a strong platform in place for future growth,” said CEO Steve Murrells.
Hilton Foods is expanding internationally after entering a joint venture with the National Agricultural Development Company (Nadec) in Saudi Arabia in May.
The deal will be its first move into the Middle East, and comes alongside a 2023 agreement to supply Walmart in Canada. Both arrangements remained on schedule, the company said.
“With seafood challenges persisting, full-year guidance has been revised moderately lower, though medium-term growth remains intact,” said Anubhav Malhotra, an analyst at Panmure Liberum.
“We believe Hilton Foods’ proven track record of growing with existing partners and international expansion holds it in good stead to win additional contracts that would provide material upside to the shares.”
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