Hilton Food shares soar as FTSE 250 firm agrees supply deal with Walmart

Hilton Food Group shares soared on Thursday after the FTSE 250 group signed a deal with Walmart to supply the retail giant’s Canadian hypermarket stores.

The food packaging business revealed it would build a new manufacturing plant in Eastern Canada that will deliver various meat products, beginning with beef, lamb, pork and seafood, to Walmart ‘supercentres’.

A newly-created subsidiary of Hilton is set to finance construction of the packing facilities, with debt used for funding investment in plant and equipment.

It hopes to commence production by 2026, with its first North American factory offering robotised store order picking into Walmart’s distribution outlets.

The Huntingdon-based firm believes the tie-up ‘represents a significant step forward’ for both groups in satisfying the growing demand in Canada for ‘high-quality, good value and increasingly sustainable protein products’.

Walmart is one of Canada’s largest employers and serves 1.5 million customers per day across more than 400 outlets. 

Following the trading update, Hilton Food Group shares jumped 8 per cent to £7.84 on Thursday lunchtime, making them the second-best performer on the FTSE 250 Index behind Trainline.

Steve Murrells, chief executive of Hilton, said the agreement was ‘another sign of the strength of our customer offer, as well as growing consumer demand for high quality, affordable, protein products, which we can deliver through our scale, international experience, and supply chain expertise’.

He added: ‘Hilton Foods and Walmart share the same high standards of sustainability, and we are looking forward to providing Walmart with the service and range of quality products for which Hilton Foods is known.’

Murrells, the former Co-Operative Group boss, took over at Hilton in July following the departure of Philip Heffer, who had been in charge for five years and with the firm for almost three decades.

The company’s new supply deal comes a week after it released half-year results showing sales rose by 5.2 per cent for £2.1billion for the 28 weeks ending 16 July.

Revenue growth reflected rising volumes and raw material prices and a full-trading period for Foppen, a smoked salmon producer bought by Hilton in March 2022.

Trading was further uplifted by a continued strong performance from its core meat category and a rebound in seafood demand. 

Yet adjusted pre-tax profits slumped by 22.8 per cent to £26.8million due to higher interest payments and cost inflation, which particularly impacted Dalco, a vegan and vegetarian food manufacturer in the Netherlands.

Founded in 1994, Hilton supplies food to retailers across 19 countries, including supermarket chains Tesco, Morrisons and Waitrose, as well as pub chain Mitchells & Butlers and cruise shipping firm Carnival.