This article first appeared on GuruFocus .
Release Date: September 03, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Hilton Food Group PLC ( HLTFF ) reported first-half adjusted profit before tax of 32.8 million pounds, which was ahead of expectations, leading to an increased full-year guidance range of 66 to 71 million pounds.
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The company's core meat and fresh prepared food businesses delivered strong profit growth, particularly in the East region, with Central Europe fresh prepared food volumes surging 26%.
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Hilton Food Group PLC ( HLTFF ) successfully extended its commercial meat partnership with Tesco in the UK, following similar extensions in the Netherlands and Denmark, reinforcing its long-term customer relationships.
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The company is making strategic progress by agreeing to sell its vegetarian and vegan business, Dalco, simplifying its portfolio to focus on core strengths in meat and fresh prepared foods.
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Hilton Food Group PLC ( HLTFF ) is on track to launch its new state-of-the-art facility in Canada in January 2027, which is expected to be its most automated plant and provide a platform for future growth with Walmart.
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The company's balance sheet remains strong with net debt at 1.4 times leverage, and it has secured 450 million pounds in revolving credit facilities for at least the next five years.
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Hilton Food Group PLC ( HLTFF ) is seeing initial benefits from improvement plans at its SeaChill seafood business, with initiatives focused on increasing yields and reducing agency staff already starting to take effect.
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The company is expanding its customer base, including new supply agreements for New Zealand South Island stores and Burger King Sweden, demonstrating its ability to add profitable volume using existing capacity.
Negative Points
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Hilton Food Group PLC ( HLTFF )'s Foppen seafood business continues to face significant challenges, with operating losses expected to persist into the second half of the year due to margin pressure from salmon pricing and FX movements.
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The company is still awaiting clarity from the FDA on restarting exports from its facility in Greece to the US, with no timeline for a decision, leaving the future of the Foppen business uncertain.
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Operating profit margin declined to 2% from 2.4% in the prior year, reflecting the negative impact of challenges in the Foppen business on overall profitability.
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The company's West region core profit was down, driven by competitive pressures in Ireland and unfavorable mix movements in the UK, requiring targeted promotions and cost reviews to address.
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Hilton Food Group PLC ( HLTFF ) incurred exceptional costs of 7 million pounds related to Foppen, including relocation of production and air freight costs, with additional exceptional reorganization and transformation costs of 7.8 million pounds.
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The company expects total capital expenditure for the Canada facility to be higher than originally assumed due to changes in scope and inflationary pressures on building materials and automation equipment.
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Hilton Food Group PLC ( HLTFF ) faces ongoing challenges in its seafood, vegetarian, and vegan businesses, with the company assessing all options for the future of Foppen, which could potentially lead to closure or divestiture.
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The company is experiencing competitive volume pressures in Ireland, where it has lost some tenders to competitors, requiring a stronger focus on cost reduction to regain momentum.
Q & A Highlights
Q: What is the outlook for FOPN, and is there any update on regulatory approval for exports to the US from Greece? If approval isn't granted, is there a route back to break-even, and what are the practical implications if the business has to be closed? A: CEO Mark stated there is no update from the FDA on restarting exports from the facility in Greece, with submissions made around April receiving no response. He acknowledged the current situation cannot continue indefinitely and confirmed that "during '27, FOPN will be dealt with." While there is a route to break-even through cost base reviews, manufacturing efficiency, and working with customers, the FDA decision is critical. The company is assessing all options for the future of the business, and the challenges are expected to continue into the second half.
Q: Can you provide more detail on the competitive dynamics in Ireland and the volume outlook for the second half, particularly regarding Christmas? Also, how much is the incremental Bacon investment in Canada? A: COO Sammy explained that Ireland's challenges stem from volume pressure due to competitive tendering, which the company is addressing through cost-saving initiatives, productivity improvements, and automation to regain volume momentum. CEO Mark added that the UK outlook for the second half is optimistic with strong promotional activity expected. Regarding Canada, the incremental CapEx for Bacon will be approximately 20 million, with returns in line with the group's 20% ROCE target. Mark emphasized that Canada is a world-class facility and a huge positive, with production ramping up from January 2027 and returns expected in years three to five.
Q: What are the components driving the strong growth in Central Europe, and is there more potential for expansion? A: CEO Mark highlighted Central Europe as a "real sweet spot," with fresh prepared food volumes up 26% in the first half. Growth is driven by innovation, efficiency, and quality, with key customer JABKA's volumes more than doubling. The company is assessing opportunities to materially increase the scale of its Poland facility expansion, which may result in higher CapEx but also higher profit expectations. Full scoping is expected by the end of 2026, with operations potentially commencing as early as late 2028.
Q: What are the components of the ongoing transformation work, and what is the expected working capital movement in a steady state? A: CFO Matt detailed the transformation programme, which includes upgrading IT and data infrastructure, organizational design focusing on central support functions, and wider strategy workstreams. Exceptional cash transformation costs are expected to be around 10 million per year over the next few years. Regarding working capital, Matt expects a modest outflow this year, in the "high single-digit edging into double" digit range, driven by additional inventory purchases for Christmas 2026 and Easter 2027. This is considered a steady-state expectation.
Q: The company raised its full-year guidance despite ongoing FOPN challenges. Can you explain the components of this increase and the extent of FOPN losses expected in the second half? A: CFO Matt explained that the raised guidance to 66-71 million (from 60-65 million) reflects the removal of Dalco losses from continuing operations and favorable FX movements. FOPN was a low single-digit operating loss in H1, and with the de-exceptionalising of operational costs in H2, losses are expected to be meaningful, offsetting the strength of the core business and improvements at SeaChill. CEO Mark added that the base business is performing well, but the company is being realistically cautious in setting expectations given the FOPN challenge.
Q: Do you think the measures at SeaChill are sufficient to turn the business back to profitability, and what specific actions are being taken? A: CEO Mark expressed confidence in the business improvement plan at SeaChill, which includes reducing agency staff, improving fish yields, and optimizing sourcing. While the impact isn't yet visible in the reported numbers, Mark noted that benefits are already coming through in the first two months of the second half. He emphasized the strategic importance of protein in diets, particularly with the rise of GLP-1 usage, and stated the company is focused on finding a sustainable, tangible business before considering other options.
Q: Can you provide an update on the Australian business and its performance, given the inflationary environment? A: CEO Mark described the Australian business as "great," with strong results and a valued customer relationship. The company is expanding into New Zealand's South Island stores, with full supply expected by October/November. Despite inflation, Hilton has managed to grow volumes alongside raw material price increases by working closely with its partner. Mark noted that the Australian dollar's strength has also provided a positive translational FX impact on reported results.
Q: Are the short-term capital-light measures in Central Europe limiting profitability, and when will the full capacity expansion be realized? A: CEO Mark acknowledged that while a new facility would enable higher profits, the company is working with customers to grow volumes in realistic time scales. He is meeting with the CEO of the group and the CEO of Poland to discuss plans. The investment will exceed the previously flagged 30 million, but returns are expected to be significantly higher. The expansion is being laid down as a partnership with minimal commercial risk, akin to Hilton's typical long-term contractual relationships.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
