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Hilton Food shares plunge 30% after Tesco meat supplier warns of 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 in the fish trade
- Slowing sales and the impact of rising costs and interest rates will weigh on profits
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Hilton Food Shares tumbled 30 percent Thursday after the food packaging industry warned that profits would be lower this year.
The company, which supplies Tesco’s lamb and beef, said sales volumes have come under pressure as customers become more cost-conscious amid the cost of living.
Demand in the fish market, a recent addition, was particularly affected by an ‘unprecedented’ rise in fish prices.
Hilton Food, which supplies meat to supermarkets such as Tesco, warns of profit
Hilton Food said slowing sales and the impact of rising costs and interest rates will result in lower-than-expected earnings this year.
The group also decided to cut its interim dividend by 13 percent to 7.1 pence.
it joins a slew of other consumer-focused companies that have issued profit warnings in recent months, including Ocado Retail, furniture company Made.com, and fashion companies Primark and Asos.
Hilton’s earnings are already dented, with the company reporting a 9.7 percent decline in pre-tax profits to £19.6 million in the 28 weeks to July 17.
Margins have shrunk while costs have risen, with total administrative burdens up 11 per cent at £139 million.
However, sales were up 19 percent at £2 billion, “driven by volume growth and commodity price inflation”.
FTSE 250 Listed Hilton Food Shares fell more than 30 percent in early trading. They were down 26 percent to 693p by 10:45 a.m. Thursday.
An ‘unprecedented’ surge in seafood prices has hit demand in Hilton’s seafood business
The company derives most of its turnover from the preparation of red meat for major British supermarket chains.
It has also recently branched out into other countries and other products, such as vegan food and fish.
At the beginning of this year, it bought Foppen, a Dutch smoked salmon specialist that was founded more than a century ago.
Other recent deals include the acquisition of Dutch vegan group Dalco and Fairfax Meadow, the largest supplier of meat to the hospitality industry.
The company told investors: “While we are capitalizing on the strength of our diversified business model and continuing to grow volumes internationally, Hilton has not been immune to the impact of macroeconomic headwinds.
“We have seen volumes come under pressure in all our markets as the cost of living rises and consumers become increasingly cost-conscious.
“In our seafood business, these trends have been exacerbated by global events that have led to unprecedented increases in commodity prices.
“Given these factors, and coupled with the impact of startup costs and rising interest rates, the board now expects profitability for the year to remain below expectations.”