2022 Annual report

This has been a year of unprecedented global and economic challenges, but Hilton Foods has continued to make strategic progress. We manufacture high quality multi-protein products utilising industry leading technology in our highly automated facilities, including advanced
robotics. Together with leveraging our expertise we can offer improved supply chain efficiencies to our customers whilst committed to our sustainable protein plan. The depth of our partnerships is illustrated through physical air bridges installed in facilities in Australia and New Zealand that link our processing facilities directly to our customers’ distribution centres. Use of these fully automated conveyor air bridges further optimises the supply chain process bringing significant logistics efficiency savings with lower carbon emissions.

During the year we acquired Foppen, a specialist smoked salmon business, with facilities in the Netherlands and Greece, which enhances our existing fish portfolio and is an entry point into the North American retail market.  We also agreed a joint venture with Agito, an Australian automation and technology solutions business with ambitions for European expansion, which brings together excellence in automation and food supply chain expertise. This JV, together with an increased stake in Foods Connected, fits neatly into a newly created Hilton Food Services division to leverage supply chain solutions to meet our customers’ needs. Additionally we invested in Cellular Agriculture, a leading cultivated protein tech business and formed a new partnership with Country Foods in Singapore.

After the challenges we faced last year in our seafood business, we took a series of steps to rebuild profitability and we are now well placed for the year ahead. Meanwhile we have continued to deliver on our strategic priorities and to set the business up for long-term, sustainable growth.  Despite the significant macro-economic challenges, we have continued our record of growing our volumes every year since Hilton Foods became a publicly listed company in 2007.

2022 saw continued year-on-year sales growth driven by higher raw material prices and volume growth including through the acquisition of Foppen, full year volumes from Fairfax Meadow and Dalco acquired in 2021 and the New Zealand facility which opened in 2021 where there was strong trading. We have demonstrated strength and resilience in our core meat category with award winning products across the categories in which we operate. We continue to remain focused on responding to consumer needs in our development of new products and leveraging our industry leading technology to support our core protein business.

Overall volume increased by 4.3% to 513,816 tonnes (2021: 492,588 tonnes). In 2022 over 75% of the Group’s volumes were produced in countries outside the UK. Adjusted operating profit fell by 3.3% and the overall operating margin decreased to 1.8% (2021: 2.2%) due to
challenges in our UK Seafood business including the impact of unprecedented inflation levels with price recovery taking longer than anticipated. There was also further disruption through automation investments which will deliver longer term efficiency benefits. 

A new leadership team is in place in our UK Seafood business which is performing well to implement a series of steps to rebuild profitability in this category. We are working in partnership with our customers to recover inflation, reduce costs and optimise the ranges we produce as well as leveraging the benefits which will come through our investment in industry-leading automation and other initiatives.  The margin per kg decreased to 13.8p (2021: 14.9p). Our customer service level remains best in class at 95.9% (2021: 96.4%).

The wide geographical spread of the Group increases its resilience by minimising its reliance on any one individual economy. Hilton’s results are reported in Sterling and are therefore sensitive to changes in the value of Sterling compared to the range of overseas currencies in which the Group trades. During 2022 the impact of average exchange rates on our results compared with 2021 was marginal. We continue to explore opportunities to develop our cross-category business in both domestic and overseas markets as well as applying our state-of-the-art skills and experience to deliver value to our customer.