Profits have bounced back at Hilton Food Group, which clawed back margin as input costs eased and the turnaround of its seafood division progressed ahead of expectations.

The Tesco meat supplier’s total revenues increased 3.7% to £3.98bn in the year to 31 December 2023, with volumes edging up 0.7%. It means Hilton has achieved volume growth in every year since its flotation in 2007, despite inflationary price increases.

However, volumes were 3% lower in its core UK and Ireland operations, with revenue increasing by 3.5% on a constant currency basis (up 3.7% at actual foreign exchange rates) due to raw material price inflation.

Volumes also fell back 2% in Europe, though revenue increased by 6.8%. Overall volume performance was boosted by 7.2% growth in Asia Pacific, which was above overall revenue growth of 6.7% in the region.

Adjusted operating profits rose 33.5% to £95m, while pre-tax profits jumped 64.2% to £48.6m.

Hilton also attributed the growth to a strong recovery in its UK seafood business, which returned to full-year operating profitability though driving the core offer, effective inflation recovery and profitable new business wins.

Meanwhile the group continued to grow internationally, boosted by a new deal with Walmart in Canada.

The core meat category continues to perform well, said the group – but it warned of ongoing market challenges in its vegan business. Hilton revealed it had consolidated its vegan and vegetarian business into a single operating facility during the year, taking a £1.2m impairment charge in the process.

It said 2024 trading started “in line with board expectations” despite “challenging” market conditions, with Hilton pointing to the global market opportunity underpinned by its core meat business, the seafood recovery and its developing relationship with Walmart.

The group said it would also continue to explore new growth opportunities, including geographic expansion and complementary M&A deals.

Peel Hunt said the results showed Hilton was “back on track”, noting: “This should improve confidence in the quality of earnings and the long-term proposition.”

House broker Shore Capital added: “Hilton has dusted itself off from the disappointments of 2022 to post an unprecedented set of headwinds, to deliver a very pleasing profit rebuild. Strategic progress is also pleasingly evident…Hilton once again offers a lot to like for equity investors.”

Hilton shares were up 1.6% to 868p on Wednesday and are up by 22% year on year.

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