Hilton Food Group PLC (LSE:HFG) shares took a dive after it warned that profits this year would be lower than expected as its UK Seafood business was finding it hard to pass on cost inflation.
The FTSE 250-listed producer of meat, seafood and plant-based protein said revenues were higher last year, in line with expectations, but inflation was a “headwind”.
UK Seafood was working with retail customers and “good progress” was reported in either mitigating or passing through its “unprecedented inflationary costs”, though this has taken longer than anticipated and is now seen persisting into early next year.
“Given the challenges in the UK Seafood business alongside the wider macro-economic environment, the board anticipates that operating profit will now be below its expectations for the full year,” Hilton Food said, adding that it is “well placed for 2023”.
House broker Shore Capital lowered its earnings per share forecasts for 2022 by 13% to 44.4p and 5% for 2023 to 54.9p.
“Whilst Hilton’s pass-through model provides for ‘reduced risk’ for much of the business, a larger multi-customer activity means the group is not immune from margin pressure in times of stress,” the analysts said.
The shares tumbled 15% to 538p on Tuesday morning.