Shares digital

Meat supplier dishes up strong results on the back of serving dominant retailers

by John Marshall

Since the publication of the Hilton Food results last month the CEO Robert Watson and the chairman Gordon Summerfield have bought 50,000 shares. These were the first significant deals by directors since the shares were floated a year ago at 150p. Watson, who joined the group as CEO in 2002, has worked in the meat trade for many years, while Summerfield is a long standing grandee of the food industry,

The group supplies meat to Tesco in the UK and Ireland, to Ahold in the Netherlands and Central Europe and ICA in Sweden. By being tied to the number one retailer in these markets the group is able to benefit from their continued expansion.

Last year the company enjoyed strong growth in each of its markets – 19% in Holland, 9% in Sweden, 7% in Ireland and 5% in the UK.

Although meat consumption is relatively flat, Hilton’s success is based on its strong links with the dominant retailer in each of the markets it serves. It is also seeking to increase its product range and widen geographical coverage. Last year it introduced a larger barbecue range for Tesco in the UK and more recently became Tesco’s own-label sausage and bacon supplier in Ireland.

More importantly it is undertaking trials with Tesco in Poland, the Czech Republic, Hungary and Slovakia. House broker Panmure Gordon believes that if these trials are successful Hilton’s volume in Central Europe could treble in two to three years.

Charles Hall of house broker Panmure Gordon, which has a price target of 220p, is forecasting EPS of 15.8p rising to 18.1p next year, placing the shares on a PE of 12.2 falling to 10.6. The broker believes that this discount to Cranswick, another quoted meat group, is unjustified.