The Daily Telegraph
Shareholders in Tesco meat supplier Hilton Foods find profit warning hard to swallow
SHARES in Tesco supplier Hilton Foods plunged to their lowest level in five years after it cut its profit forecasts as shoppers tighten their wallets.
Almost 30pc was wiped off the value of Hilton Foods yesterday, making it the worst performer on the FTSE 250.
Hilton Foods, which supplies meat and fish to supermarkets including Tesco, said it anticipated that profitability for the year will be below expectations as it said shoppers were becoming more cost-conscious amid a worsening cost of living crisis.
In its seafood business – in which it procures and packs fresh, chilled and frozen fish – Hilton Foods said it had also experienced “unprecedented” raw material price increases, after the war in Ukraine prompted nations to place tariffs on Russian white fish exports. Russia controls around 45pc of the global market for white fish.
Analysts at Numis said the company had “clearly not been immune” to the cost challenges and consumer response to higher prices. They added: “Downgrades of this nature for Hilton are rare.”
It comes amid spiralling meat prices in Britain, with beef costs at historic highs. Figures from the Agriculture and Horticulture Development Board suggest that prime cattle prices are around 25p per kilogram (11p per pound) higher than last year. Shoppers have also been dealing with higher prices for other household staples, with their average grocery spend now £571 higher, according to Kantar.
Hilton Foods, which employs more than 6,000 people and operates 24 processing and packing plants, reported a 20pc rise in revenues to £2bn for the six months to July 17, driven by higher prices. It also bought a Dutch smoked salmon business in March this year, which buoyed sales and meant it started selling into the US for the first time.
However, profits slipped 10pc in the period after its margins were squeezed and its interest costs went up. Hilton Foods said it was cutting shareholder dividends to 7.1p per share for the first half, compared with 8.2p a year earlier.