Shares in Hilton Food (HFG) hover near five-year lows at
546p and are down more than 50% year-to-date after a second profit warning (8 November) in as many months.

This has left a sour taste with investors mindful of the adage
that profit warnings come in threes. In its latest earnings alert, the meat, seafood and vegetarian foods packer warned its UK seafood business will deliver a softer performance than initially expected.

While Hilton has made ‘good progress’ in either mitigating or passing through ‘unprecedented’ cost inflation to retailers, slower progress renegotiating pricing with customers, at a time when consumers are feeling the pinch, means full year operating profit will be below expectations.

Shore Capital cut its year-to-December 2022 pre-tax profit estimate by 14% to £54.5 million and downgraded its earnings forecasts for 2023 and 2024.

The house broker knows that ‘a management team with skin in the game will be hurting’, adding that ‘management has delivered considerable value to shareholders and it knows it needs to reassure to rebuild’.

In the first warning (15 September), Hilton Food stated that annual profits would fall short of expectations due to cost pressures on consumers, soaring seafood raw material prices, rising interest rates and start-up costs.

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