Tesco meat packer Hilton Food Group has reported "good progress" in a number of its western European markets for the past quarter (third quarter) to November 5.
Declines in meat sales were driven by horsegate
The Huntingdon-based business has opened new production facilities in Denmark, which has helped it build on steady growth during the first half of the year (H1), while reporting that its business in The Netherlands continued to perform well, supported by contract wins in the sliced meats sector.
Reporting on its performance, Shore Capital analysts Daren Shirley and Clive Black said they were encouraged by a recent pick-up in trade for the company in the UK, which suggested Tesco was beginning to see a recovery of the H1 volume declines driven by the horsemeat adulteration scandals.
Horsemeat scandal
While the Hilton Food Group itself had not been implicated directly in the horsemeat scandal, Shirley and Black noted that its Irish business, which had also been negatively impacted by the horsemeat scandal, had not yet resumed growth.
Shirley and Black also suggested that Hilton's central European markets remained challenging, with trading reported to be "in line with expectations".
Challenges
Given the challenges being faced in a number of consumer markets, they took this to be in line with the sales and volume declines reported for H1, although they expected the company to benefit from favourable currency exchange rates.
Hilton's Australian joint venture was reported to be making good progress, with its Bunbury facility proceeding to plan and already packing pork, lamb and beef. "We continue to expect the Bunbury facility to be broadly break even in the current year, with a positive contribution thereafter," said Black and Shirley.
"The larger Victoria facility remains in the early stages, with an unchanged expectation from management for $1M of profit and loss investment in both 2013 and 2014."
