Hilton Foods Navigates Inflationary Headwinds, Cautious Outlook for 2026

Hilton Food Group (LON: HFG) released a trading update for the third quarter ending October 19, 2025, revealing a resilient but challenged performance amid persistent inflationary pressures.

While volumes in red meat and convenience segments remain solid, the seafood division continues to struggle with softer white-fish demand, impacting overall profitability.

The company expects adjusted pre-tax profit for the financial year ending December 28, 2025, to land between £72 million and £75 million. This guidance reflects the anticipated seasonal uplift in Q4, which is expected to partially offset subdued underlying demand.

Net cash receipts of £71 million from the completion of the Foods Connected and Fairfax Meadow transactions bolstered the balance sheet during the quarter.

Strategic investments in new Canadian facilities are ongoing, and a partial inventory unwind from Christmas ranges is expected. Net debt at year-end is projected to be only marginally higher than at the end of FY24.

However, the board has adopted a more cautious outlook for 2026, anticipating that profit progression will be difficult due to the emerging impact on demand from ongoing inflationary pressures and continued disruption at the Foppen smoked salmon business.

Regulatory restrictions on shipments to the US continue to create operational challenges and additional costs for Foppen. The US government shutdown has further delayed approvals for the Greek facility to resume production, effectively ruling out any resumption in 2025.

While the development of new operations in Canada and the joint venture in Saudi Arabia are proceeding as planned, these long-term growth initiatives are unlikely to provide immediate relief from the current headwinds.

The company is leveraging its long-term customer relationships and focusing on product innovation and operational efficiency to mitigate the impact of inflation and maintain its competitive position.

Driver Breakdown:

• Resilient Volumes: Solid performance in red meat and convenience categories demonstrates the strength of core product offerings.
• Seafood Struggles: White-fish demand remains weak due to high raw material inflation and cautious consumer spending.
• Foppen Disruption: Regulatory issues and delays in resuming production in Greece continue to weigh on profitability.

Hilton Food Group's ongoing business review, which is assessing operations and portfolio, has reached an advanced stage.

The company expects to provide an update on the conclusions of the review alongside the Full Year Trading Update on 29th January 2026. This review aims to optimize the Group's operations and strengthen long-term shareholder returns.

Analyst Summary: Bull and Bear Cases