Hilton Food Group (LON:HFG) reported 2025 full-year results that management described as a “solid financial performance” despite a challenging operating environment, with stability in its core meat operations offset by weakness in seafood and other non-core areas.
Adjusted profit before tax (PBT) came in at GBP 73.2 million, down around 3% year-on-year, which CEO Steve Murrells said reflected the disposal of Fairfax Meadow as well as “the challenges in our seafood businesses and Dalco.” The company reiterated its 2026 outlook, keeping guidance unchanged from its January trading update.
2025 performance: resilient core, pressure in seafood and other non-core businesses
Adjusted earnings per share were GBP 0.56, down 7.4%. Osborne said the decline reflected a “slightly higher tax rate of 30% due to the impact of truing up some historic tax allowances.” The company maintained its progressive dividend policy: with the final dividend flat, the full-year dividend per share increased 1.4% to GBP 0.35.
Osborne noted that the group’s core meats and fresh prepared foods now account for around 90% of revenue. Within regional performance (excluding Fairfax Meadow), he said core meat volumes in the UK and Ireland were “resilient” and only slightly down despite beef inflation of more than 30%, while revenue increased 23.5% as inflation flowed through. In Europe, volumes were stable overall, including “double-digit growth in fresh prepared foods in Central Europe” and the benefit of new customer volumes in Denmark. APAC delivered volume growth despite renewed raw material inflation.
Seafood, vegetarian, and vegan volumes fell 2.6%, with Osborne citing UK whitefish inflation as a key headwind. He said Seachill moved into a loss-making position due to lower volumes and the impact on gross profit, while Dalco improved but remained loss-making. Foppen’s underlying profit was described as stable, though the year included significant non-underlying costs tied to regulatory restrictions affecting its facility in Greece.
Exceptional items, disposals, and balance sheet
Osborne said non-underlying and exceptional items represented a net profit of GBP 29.3 million for the period, with “a number of moving parts.” The largest costs were related to Foppen. The company incurred GBP 9.2 million of cash costs relating to relocating production from Greece to the Netherlands and using air freight rather than sea freight to maintain customer supply. Hilton also recorded an GBP 18.4 million charge for inventory that could not be delivered to the US or resold elsewhere.
In addition, the company incurred GBP 9.6 million of reorganization and restructuring costs, up from GBP 4.2 million in 2024, which Osborne linked to “the ramp-up of our transformation activity and group reorganization.” He said the company expects restructuring costs in the range of GBP 5 million to GBP 10 million annually over the next few years.
On the other side of exceptional items, Osborne said Hilton recognized GBP 66.5 million of profit on disposal related to Fairfax Meadow and Foods Connected, describing them as steps to simplify the portfolio while “realizing significant value for the group.”
Net bank debt ended the year at GBP 126.7 million, equivalent to 0.9x net debt to EBITDA. Osborne said net debt improved slightly year-on-year, aided by divestment proceeds and a partial unwind of working capital, despite elevated growth capital spending, with 2025 the main year of investment in the Canada project.
Hilton also refinanced its bank facility in February, increasing revolving credit facilities to GBP 450 million for at least five years. Osborne added that the bank facilities are “enhanced” by lease and customer supply chain financing with margins typically 0.5 to 1.5 percentage points lower than the bank facility.
Strategic refresh: prioritize core red meat and fresh prepared foods
Murrells said the company aims to be “the international red meat partner of choice,” while investing in fresh prepared foods “where returns are attractive.” He framed the strategic refresh as building from the “structural strength” of the core meat businesses and a long-standing partnership model with retailers, but also focused on unlocking further growth through portfolio optimization, targeted investment, and evolving its operating model.
Murrells outlined three medium-term growth levers:
- Maximizing the core, including continuous efficiency improvements to support margin resilience and predictable cash flows.
- Enhancing the mix by increasing exposure to higher-margin segments, including value-added meat and fresh prepared foods.
- Geographic expansion by replicating the partnership model in “under-penetrated and high-growth markets.”
As part of “portfolio optimization,” Murrells said the company will limit future investment in Seachill, Foppen, and Dalco, with the objective of reducing earnings volatility, improving returns, and increasing “flexibility and optionality for future value realization.” He emphasized in Q&A that the company has not decided to sell any of these businesses, but is working to “deliver optionality.”
Investment pipeline: Canada, Saudi Arabia, and Poland
Hilton said its growth investments in Canada and Saudi Arabia remain on track, with expected contribution from 2027 onwards. COO West Samy Zekhout described Canada as a “step-change growth opportunity,” centered on a new facility supporting a 10-year partnership with Walmart, scheduled to launch fully in early 2027. He said product development is complete, with production testing expected in the second half of the year, and that the project should begin contributing to profit in 2027 with full contribution from 2029.
In Central Europe, COO East Melanie Chambers discussed plans to invest up to GBP 30 million over 2026 and 2027 to expand fresh prepared foods capacity in Poland. Chambers said the project will expand the footprint of the existing fresh prepared foods operation next to the fresh meat factory, adding capacity, automation, and processing capability. She highlighted product areas including sous-vide, ready meals, sandwiches, and pizzas, and said the site could operate as a hub serving neighboring markets. Chambers added that the investment is expected to generate returns “well above our cost of capital,” with return on capital employed above 20% over the life of the project.
2026 outlook unchanged; inflation and freight risks discussed in Q&A
Management reiterated 2026 guidance for adjusted PBT of GBP 60 million to GBP 65 million. Murrells said the year-on-year reduction largely reflects continued challenges in seafood, vegetarian, and vegan businesses, and the company remains “cautious on the impact of red meat inflation.” Osborne added that the anticipated reduction in profit is predominantly due to Seachill, Foppen, and Dalco.
In Q&A, Berenberg’s Matthew Abraham asked about raw material inflation assumptions. Osborne said “the basis for the guidance we issued in January hasn’t really changed,” and that inflation views were built into forecasts. On freight dynamics and Middle East uncertainty, Murrells said many contracts are cost-plus and pass costs through to customers, while the company continues to review internal costs and is “very mindful” of the situation.
Peel Hunt’s Charles Hall asked about consumer behavior under higher red meat prices. Murrells said the UK is seeing consumers “trading down,” including toward mince, while there remains a premium segment as some consumers eat out less and consume at home. Chambers added that Australia has seen about 3% growth but with mix changes toward promotions such as “3 for AUD 25” and “3 for AUD 20,” with co-creation work on a “middle tier” offering.
On working capital, Osborne said inventory built ahead of seasonal peaks has “largely unwound,” though inflation increased stock value. Later, he said the company would expect “a modest improvement” in working capital over 2026, while Murrells noted Hilton would buy ahead if opportunities arise to manage inflationary pressures or secure supply.
Regarding Foppen, management said regulatory restrictions are expected to remain in place for at least the first half of 2026, with further exceptional costs anticipated. When asked for a ballpark, Osborne said the “current run rate is around EUR 800,000–EUR 1 million a period,” noting a shift away from air freight should reduce costs over time and that operating out of the Netherlands increases costs.
Osborne also outlined updated financial framework priorities, including maintaining net bank debt (excluding leases) at 1–2x EBITDA through the cycle, annual investment of GBP 45 million to GBP 55 million in facilities, targeting group ROCE of at least 20% (20.1% in 2025, expected to drop below 20% in 2026 due to pre-productive Canada capital), and maintaining the progressive dividend policy with an intention to move back to around two times earnings cover over time.
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.
