Meat packing firm Hilton Food Group has announced a new joint venture with Woolworths - Australia's largest retailer - in its latest trading statement for the 52 weeks to December 30.
The joint venture has been established through a new company, Woolworths Meat Co, which is 50% owned by a new Hilton subsidiary, Hilton Foods Asia Pacific, and 50% owned by Woolworths.
The business will operate the Banbury Meat Centre, near Perth, Western Australia under an agreement starting soon. Banbury currently supplies 84 Woolworth stores in Western Australia with a range of fresh meat including beef, lamb and pork.
No impact on profits
Analysts at Panmure Gordon predicted no impact on profits, but raised their earnings per share (EPS) forecast for 2014 by about 6% from 28.1p to 29.9p. The analysts also raised their 12-month price target from 315p to 360p, with a recommendation to 'buy' Hilton Food Group stock.
But they did not change their forecast for 2012, estimated at 24.3p EPS.
Graham Jones, analyst at Panmure Gordon, said: "This is a very significant move for Hilton, representing its first move outside of Europe and the establishment of its first presence in Asia Pacific."
Jones predicted the new facility will see investment during the course of 2013 to leave it at a similar standard to Hilton's modern facilities in Europe.
He did not anticipate any additional capital costs for Hilton. But start-up costs meant his initial assumption was for the joint venture to break even this year, followed by a 1.2M Pounds share at net income for the joint venture in 2014.
Hilton said: "The Board of Hilton believes that good opportunities exist for further collaboration with Woolworths in Australia through the new joint venture."
The UK and Ireland
The joint venture comes with Hilton's announcement that it has performed in line with expectations for the 52 weeks to December 30 2012, reporting solid performances in the UK and Ireland where it has supported its customers on a number of initiatives.
The performance in Sweden, where the local economy grew less rapidly than in 2011, has been steady, as it has been in Holland, said the firm.
"In central Europe, we are pleased with the continued development of the business over the period, though more recently we have seen increasing competitive pressures in the marketplace," said Hilton.
"The group's balance sheet remains strong, with net debt close to budgeted level, leaving us well positioned for future expansion," it added.
Hilton Food Group will publish its full year results on March 28 2013.
Meanwhile, mergers and acquisitions in the UK food and drink manufacturing sector last year helped set a three-year record for the UK economy, amounting for 15.4% of all transactions, according to information services company Experian.
