Investment case

The structural strengths of our core meat and fresh prepared food business is what gives us confidence in the future of Hilton Foods. The Group has:

• Long-term partnerships with leading international retailers.

• A scaled and efficient red meat platform with well invested facilities.

• Proven capability to enter new markets through geographic expansion.

We recognise that markets are evolving and so must Hilton Foods. Our competitive advantages in red red meat will allow us to compete effectively and grow, despite low projected growth levels in our mature markets. However, we expect higher levels of market growth in value-add fresh prepared food in some markets where we already have facilities and deep retailer relationships. We see this as an area of significant potential for the Group.

With this context, we have identified three levers of future growth:

• Maximise the core:

  • Continue to benefit from our leadership position in red meat, maintain structural advantages, and drive efficiency and margin improvement.

• Enhance the mix:

  • Scale value-added meat and fresh prepared foods and expand into higher margin categories.

• Expand geographically:

  • Replicate our proven retailer partnership model internationally, focus on under-served and higher-growth markets, and scale with anchor retail partners.

In addition, we have put in place improvement plans for our Seafood, Vegetarian and Vegan businesses (Seachill, Foppen and Dalco) that have limited synergy with the Group’s core meat capabilities. Our aim is to reduce volatility, improve returns and increase strategic optionality in these businesses.

Our capital allocation framework is underpinned by our desire to retain a strong balance sheet, providing an adequate buffer against any market shocks and flexibility for future investments. We expect net bank debt to adjusted EBITDA to remain in the range 1-2x through the cycle.

We will continue to invest in our existing facilities, underpinning core organic growth through improved automation and productivity and the development of new product categories, in line with our strategy. We expect to invest between £45m and £55m of capital expenditure in a typical year.

We will also look for opportunities to accelerate growth through incremental investment, for example in new market entry or in material capacity expansion. Any investment approved will be consistent with the Group’s strategy and must also demonstrate risk adjusted post-tax unlevered returns higher than the Group’s cost of capital and be in support of the Group’s ROCE target of above 20%. 

We recognise the importance of cash returns to shareholders and will maintain our progressive dividend policy, with an ambition to move the dividend cover from earnings ratio towards 2x over time through adjusted earnings per share growth. We will continue to seek attractive value-adding investment opportunities in line with our strategy. However, should no attractive opportunities to accelerate growth exist over the longer-term we would consider returning any surplus capital to shareholders over time, alongside continuing with our ordinary dividend payments.    

We are targeting mid-single digit percentage growth in adjusted operating profit per year on average over the medium-term from our existing core operations, plus our projects in Canada and Saudi Arabia and from our planned investment in Poland. This growth will be driven in part by margin expansion as we continue to move into additional higher-value fresh prepared food categories. The profit growth target excludes any contribution from Seachill, Foppen and Dalco. It also excludes the impact of any future incremental capital expenditure beyond our existing ongoing or planned projects to accelerate growth.

Our business model is intrinsically cash generative, and we expect to deliver cash conversion, defined as free cash flow as a proportion of net income, of 100% each year on average, adjusted for the impact of any material incremental growth investment in any given year.

Our established sustainability credentials are fundamental to our customers, with initiatives to reduce packaging waste providing a key competitive advantage. Having introduced our Sustainable Protein Plan in 2021, we have made good progress towards achieving our target of achieving net zero by 2048. We have reduced our Scope 1 and 2 emissions by 36% and Scope 3 emissions by 33% compared to a 2020 base, with targets to reduce them by 95% and 45% respectively by 2030.

In 2026 we updated our Sustainable Protein Plan under two pillars, People and Planet. For further details, please visit the sustainability section of the website or refer to 2025 Sustainability Report.