Hilton Food Group (LON:HFG) reported higher first-half revenue and raised its full-year profit outlook, citing strength in its core meat and fresh prepared foods operations, while continuing to address losses and operational challenges at its Foppen seafood business.
Adjusted profit before tax from continuing operations reached £32.8 million in the first half, ahead of the company’s expectations. The board maintained its interim dividend at 10.1 pence per share under its progressive dividend policy.
Revenue Growth Supported by Higher Prices and Volumes
CFO Matt Osborne said continuing-operations volumes increased 2.1%, while constant-currency revenue rose 11.5%, as prices remained above year-earlier levels. Operating profit fell 3.4% to £45.8 million on a reported basis, or 6.6% on a constant-currency basis, as higher profit in core operations was more than offset by Foppen’s difficulties.
Operating margin declined to 2.0% from 2.4% a year earlier. Adjusted earnings per share were 25.7 pence, while net bank debt was just under £200 million at the half-year, equivalent to leverage of 1.4 times.
In the group’s East division, which includes Australia, New Zealand and Central Europe, volumes rose in all markets. Fresh prepared food volumes in Central Europe increased 26%, while higher Australian beef prices helped drive 15.3% revenue growth in the region. Osborne said Central European fresh prepared foods delivered materially higher profit.
West division revenue increased 9%, with performance in the Nordics and the Portuguese joint venture offsetting lower volumes in the U.K. and Netherlands. Competitive pressures in Ireland and unfavorable product mix in the U.K. weighed on West profit, although management said it was working with customers on targeted promotions for the second half.
Seafood volumes rose 6%, supported by salmon and prawn sales as whitefish demand remained under pressure. Foppen volumes also increased as the company served customer demand from its Netherlands facility, but the business experienced significant margin pressure tied to salmon pricing and foreign exchange.
Foppen Remains a Significant Challenge
Hilton incurred £7 million of exceptional costs related to Foppen in the first half. About half related to moving production from Greece to the Netherlands to maintain supply to U.S. customers. Other costs included air freight, which stopped in April, and inventory losses after a fire at a third-party U.S. warehouse.
Osborne said Foppen posted a low-single-digit operating loss in the first half and that challenges were expected to continue in the second half. Management plans to stop treating operational Foppen costs as exceptional during the second half.
The company is still awaiting clarity from the U.S. Food and Drug Administration on restarting exports to the U.S. from its Greek facility. Management said operating the Greek site with little or no volume while producing in the Netherlands is more expensive.
“During 2027, Foppen will be dealt with,” management said during the question-and-answer session, adding that it would assess all options for the business. The company said a route to break-even could involve changes to manufacturing, sourcing, efficiency and customer product mix, but regulatory clarity would be important.
At Seachill, Hilton said performance-improvement measures are beginning to take effect, although the benefits were not yet visible in the reported first-half results. The initiatives include improving fish yields, reducing agency labor, resizing certain departments and reviewing sourcing practices.
Portfolio Simplification and Growth Investments
Hilton agreed in July to sell its vegetarian and vegan business, Dalco, to Livekindly for £5.4 million. Completion is expected in the fourth quarter of 2026. The company recorded a non-cash impairment of £16.7 million related to Dalco, which is classified as held for sale.
Management characterized the sale as part of a broader effort to simplify the portfolio and concentrate on meat and fresh prepared foods. It also incurred £3.2 million in reorganization and restructuring costs, mainly redundancies, and £4.6 million in transformation costs. Hilton expects cash transformation costs of about £10 million annually over the next several years.
The company is increasing investment in geographic expansion and capacity. Its Canadian facility is scheduled to begin operations in January 2027, with production expected to ramp through the first half. Hilton has spent £80 million on the project so far and expects to invest about £25 million in the second half to complete its core scope. Bacon lines are planned for 2027, with incremental capital expenditure of roughly £20 million.
Management said total spending on the Canadian project will exceed earlier estimates because of scope changes and inflation in construction materials and automation equipment. However, it expects the site to generate returns in line with its target return on capital employed of at least 20% once established.
Hilton’s Saudi Arabian joint-venture facility with NADEC is expected to start operations in late fourth-quarter 2026 and generate its first positive earnings contribution in 2027. The company also plans to expand fresh prepared food capacity in Poland, where management is assessing a larger-than-originally-planned project that could begin spending in 2027 and start operating as early as late 2028.
Full-year capital expenditure is expected to be around £100 million. While net debt is expected to rise during 2026, including from additional U.K. inventory purchases intended to support Christmas 2026 and Easter 2027 supply, Hilton said it expects to remain within its target leverage range of one to two times.
About Hilton Food Group (LON:HFG)
Hilton Food Group plc is a leading international food and supply chain services partner. We partner with leading retailers, brands and food service partners across the world.
We offer a unique multi-category proposition of outstanding protein products including meat, seafood, vegan and vegetarian, and easier meals. We also offer a range of supply chain service expertise and solutions through our investment in innovative, leading technology such as Foods Connected, Agito Group and Cellular Agriculture Ltd.
We are a business of over 7,000 employees, operating from 24 technologically advanced food processing, packing and logistics facilities across 19 markets in Europe, Asia Pacific and North America.
