Hilton Food Group meat

Positive foreign currency conditions and growth in a number of markets should help meat packer Hilton Food Group deliver better than expected results for the year to 1 January.

The group, which signed a joint venture with Portuguese food retailer Sonae Modelo Continente earlier this month, had performed “slightly ahead of the board’s expectations” during 2016, according to a trading update to the London Stock Exchange last week.

Hilton singled out its European business as a strong performer last year, with the UK in particular having a good last quarter in 2016. Ireland also performed well, the update said, while both Sweden and the Netherlands saw sales slightly up. However, sales were slightly down in Denmark, “reflecting consumer demand”.

The supplier added that its joint venture with Woolworths in Australia “continues to make good progress, with the Victoria plant delivering strong year-on-year growth as expected”. Planning and preparation work was also underway on the site of a new production facility in Queensland.

The update was welcomed by City brokers, with Peel Hunt analyst Charles Hunt noting the group had benefited from a “helpful performance” from supply partner Tesco, which last week reported a 1.3% increase in sales during the 12 weeks to 1 January.

Hunt said he expected Hilton to outperform the Tesco sales boost “due to changes in the meat category regarding pricing and availability, as well as securing additional business”.

The broker upgraded its profit estimate for the business by 1%. It now expects EBITDA to hit £55.5m for 2016, up from £48.3m in 2015. “The company is set for a protracted period of profit growth with Sonae in the short term and the recent deal with Woolworths set to deliver over the medium term,” Hunt said.

Hilton will publish its full-year results on 30 March.