Hilton Foods Ireland, the Irish subsidiary of Northern Ireland secondary meat processor Hilton Food Group, reported a near 40% decline in pre-tax profits to just over €2m for its 2016 financial year. Hilton Ireland, which operates from a processing and packaging facility in Drogheda, reported a 4% increase in sales for the year to €117.2m.

However, operating profits declined more than a third (-35%) to €2.3m, as profit margins fell from 3.1% to 1.9%. This fall in profits is mainly due to the double-digit deflation in the value of sterling in 2016.

Hilton’s facility in Drogheda is supplied with primary meat cuts from Irish meat processors such as ABP and Dawn Meats. These primal cuts are sliced and packaged at the Drogheda facility for sale in Tesco stores in the UK and Ireland.

Seachill acquisition

Hilton Food Group recently completed the acquisition of Icelandic Seachill, a UK-based seafood company that is contracted to supply salmon and whitefish to Tesco. While no details of the deal have been disclosed, Hilton may have paid up to £80m (€91m) for Seachill based on an eight times multiple of the company’s earnings (EBITDA) of £10m in 2016.

To finance this, Hilton issued 7.35m new shares in the company on the London stock exchange in late October at a price of 789p. The placing of these shares raised almost £56m (€64m) to part-fund the Seachill acquisition.

With Hilton already heavily contracted to Tesco to supply beef, lamb and pork, the acquisition makes sense, even if it is a seafood business.