Hilton Food shares tumble 30% after Tesco meat supplier warns on profits as cost of living crisis hits demand
- Group said customers are becoming more cost-conscious
- An ‘unprecedented’ rise in fish prices has hit demand at its seafood business
- Slowing sales and the impact of rising costs and interest rates will hit profit
Hilton Food shares tumbled 30 per cent on Thursday after the food packing business warned profits would be lower this year.
The company, which supplies Tesco’s lamb and beef, said sales volumes have come under pressure as customers are becoming more cost-conscious amid the cost of living crisis.
Demand across its seafood business, a recent addition, was particularly impacted due to an ‘unprecedented’ rise in fish prices.
Hilton Food, which supplies meat to supermarkets like Tesco, has warned on profit
Hilton Food said slowing sales and the impact of rising costs and interest rates will result in lower-than-expected profit this year.
The group also decided to slash its interim dividend by 13 per cent to 7.1p.
it joins a raft of other consumer-facing companies issuing profit warnings in recent months, including Ocado Retail, furniture company Made.com as well as fashion companies Primark and Asos.
Hilton’s earnings have already been dented, with the company reporting a 9.7 per cent fall in pre-tax profit to £19.6million in the 28 weeks to 17 July.
Margins have shrunk, while costs have risen, with total administrative expenses 11 per cent higher at £139million.
Revenue, however, was 19 per cent higher at £2billion, ‘driven by volume growth and raw material price inflation’.
FTSE 250 listed Hilton Food shares fell more than 30 per cent in early trading. They were down 26 per cent to 693p by 10:45am on Thursday.
An ‘unprecedented’ rise in fish prices has hit demand at Hilton’s seafood business
The company derives most of its sales from preparing red meat for big UK supermarket chains.
It also recently branched out into other countries and other products, like vegan food and fish.
At the start of this year it bought Foppen, a Dutch smoked salmon specialist founded more than a century ago.
Other recent deals include the acquisition of Dutch vegan group Dalco and Fairfax Meadow, the biggest supplier of meat to the catering trade.
The company told investors: ‘While we benefit from the strength of our diversified business model and continue to grow volumes internationally, Hilton has not been immune from the impact of macroeconomic headwinds.
‘Across our markets, we have seen volumes come under pressure with the cost of living increasing and consumers becoming ever more cost-conscious.
‘In our Seafood business these trends have been exacerbated with world events leading to unprecedented raw material price increases.
‘Given these factors, and combined with the impact of start-up costs and rising interest rates, the Board now anticipates that profitability for the year will be below expectations.’