The Hilton Food Group reported strong financial results for the three months to the end of July 2015, despite significant currency headwinds in all of the overseas markets in which the group trades.

Hilton reported an operating profit of £13.7m (€18.8m) for the three months to the end of July – a 1.3% increase compared with the same period in 2014. However, in constant currency terms, operating profit was 11.3% higher. Pre-tax profits increased slightly to £13.7m (€19m).

The group’s turnover stood at £579.2m (€796.5m) for the three months, a decline of 2.2% compared with last year, as a result of challenging trading conditions in Sweden and Denmark in particular, and adverse currency translations.

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Despite a fall in turnover, sales volumes actually increased significantly by 5% over the period to almost 128,000t. The increase in volumes is due to a new supply contract with Tesco taking effect, a return to growth in the group’s Irish business and continued growth in the Netherlands, thanks to Hilton’s partnership with retailer Albert Heijn.

As a buyer of carcase meat from Irish processors, Hilton is an important route to market for Irish beef and works closely with Irish meat processors such as ABP, who up until last year had a 6% stake in the company, valued at close to €14m.

By division

Hilton operates two principal divisions, Western Europe and Central Europe.

The Western Europe division is the most important to the group accounting for the majority of sales. Despite a 1.1% decrease in turnover, the division recorded a 4% increase in operating profit to £15.4m, while sales volumes were up by more than 5%.

In the past year, the group has undertaken major capital investments in its Huntingdon facility in the UK to extend capacity and service the new contract with Tesco, as well as modernising its processing plant in Sweden.

Hilton’s Central Europe division saw turnover fall by more than 15% to £39.3m, while operating profit was relatively steady at £1.1m. Hilton’s processing facility in southern Poland supplies Tesco and Ahold stores in Slovakia, Czech Republic, Hungary, Poland and the Baltic states.

Outlook

Despite the competitiveness of the retail grocery sector and the prevailing weakness of economic conditions in many of its European markets, Hilton’s underlying trading performance remains strong. The group anticipates that weak consumer expenditure in Europe will remain a feature for the remainder of the year, while currency headwinds remain unpredictable and could well continue.

However, as a result of new supply contracts, increased volumes and a broad geographic consumer spread, Hilton expects full-year results to be positive and in line with expectation.