Hilton Food's sales fall, remains positive over investments

LONDON (ShareCast) - Currency headwinds and challenging trading conditions in some European markets weighed on Hilton Food Group's annual sales. The meat packing business said sales fell 2.3% to £1.1bn, with tougher revenue streams in Central Europe, Sweden and Ireland (Other OTC: IRLD - news) offsetting a 3.5% growth in volumes in the UK and the Netherlands.

The strong pound and lower raw material meat prices led to a 2.3% decline in revenue, while operating profit rose 1.1% to £26.1m and profit before tax edged higher 1.3% to £25.2m.

The group, which hiked its full year dividend 4.3% to 13.3p, said its Australian joint venture with Woolworth Limited in Australia was "performing well", with the expansion of one facility already completed and another to be commissioned in the third quarter.

"The high level of investment made in our meat packing facilities in 2014 was essential to facilitate the group's planned future growth," said group chief executive Robert Watson.

Despite the decline in sales and revenue, analysts at Shore Capital reiterated their 'buy' rating on the stock, citing the company's potential to "add to growth momentum from entry into additional markets" and a strong balance sheet.

The brokerage also highlighted that the London-listed group could benefit from improvements in the performance of Tesco (Xetra: 852647 - news) , the company's biggest client in the UK, Ireland and Central Europe, as well as from investments in Australia, Sweden and the UK.

Hilton Food Group shares were up 0.62% to 422.62p at 08:19 on Wednesday.