Member Article

Durham's Hargreaves moves from steel and coal to target property and energy sectors

Durham-based Hargreaves Services plc has today revealed the extent of its strategic repositioning programme.

Traditionally, the supplier of solid fuels and bulk material logistics has operated in the coal and steel sectors. However, with both industries suffering growing challenges of late Hargreaves has undertaken a course of diversification to secure its future trading.

Over the last two years Hargreaves has worked to assume a far-reaching restructuring exercise aimed at simplifying the business. Through disposals and business closures, the firm has worked towards reducing debt levels, as well as seeking to mitigate the risks and volatility faced through coal, coke and steel related activities.

Recent pressures in the steel markets, including the closure of Redcar steelworks and the uncertainty over the future of Port Talbot have exacerbated the trading pressures in the UK.

Although the coal and steel sectors remain highly challenging, the company has made significant progress in transitioning the business away from thermal coal exposure in the UK.

New initiatives

As Hargreaves’ repositioning exercise nears completion,the firm will be putting an increased focus on Property and Energy projects.

Gordon Banham, Group Chief Executive, explained: “This announcement marks an important turning point for the Group. After eighteen months of market turmoil, we are finally completing a challenging phase of restructuring to move away from our traditional areas of focus and reposition the Group.

“The bulk of that restructuring work is complete and we can now look forward and actively pursue the value creation opportunities ahead of us. We have protected our strong balance sheet position throughout this difficult time.

“Today we find ourselves with a balance sheet with net assets of around £140m and we have set ourselves the objective of turning £66m of legacy assets on that balance sheet into free cash as quickly as possible in an orderly fashion.

“We are also setting ourselves the aspirational goal of developing and realising £50m of incremental value from our extensive property and energy project portfolio over the next five years to further grow our net asset base.”

He added: “Finally, we have identified a core of business operations that offer a long term value creation opportunity and we are focused on growing operating profits and delivering strong contributions from each of these areas. Whilst risks remain in achieving our targets, the board is confident that the Group is well placed and well equipped to deal with these challenges.”

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