Partner Article

Revenue halves at Durham’s Hargreaves amidst UK coal and steel slump

Hargreaves Services plc, the Durham-based supplier of solid fuel and bulk material logistics, has reported a disappointing set of financial results reflecting the current pressures in the UK coal and steel markets.

Announcing its interim results for the six months ended 30 November 2015, the logistics firm revealed that its continuing revenue has halved, dropping from £351.2m in November 2014, to £174.8m. Moreover, the firm’s continuing pretax profit has plummeted by 94.7%, from £15.2m to just £0.8m.

Despite the drop, Hargreaves believes it is well positioned to generate substantial cash as stock and plant positions are unwound, citing its acquisition of Blackwell in January 2016 as a progressive means of diversifying.

Chairman David Morgan explained: “Market conditions in the UK coal and steel sectors remain very challenging. Given continuing weak commodity prices, low coal demand and the announcement of further coal station closures, the Board has taken the decision to reduce the Group’s exposure to thermal coal markets over the next eighteen months.

“The recent acquisition of Blackwell represents an important strategic step and the ongoing development of value across the property portfolio continues to make further progress. The Board is also excited by the opportunities being presented to accelerate the development of its international presence in Industrial Services activities.”

He added: “The recent wet and mild weather has further impacted the Group’s short term trading, curtailing coal production and restoration activities, however the Board is confident that profitability can be maintained even in the face of such severe market conditions. The Board has already taken significant steps in reducing costs and restructuring the Group and these efforts are ongoing.”

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