Hargreaves Services interim profit, revenue slide amid tough markets

Hargreaves Services reported a drop in interim revenue and profit and cut its dividend, pointing to pressures in the UK coal and steel markets.

For the six months ended 30 November, the supplier of solid fuel and bulk material logistics posted continuing pre-tax profit of £800,000 from £15.2m in the same period a year ago, as revenue slid 50.2% to £174.8m.

At the same time, the company declared an interim dividend of 1.7p per share, down 83% from 2014.

Chairman David Morgan said: "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 18 months. This follows the decisive actions taken in the past eighteen months to simplify the Group and exit markets such as coke production and trading.”

Morgan said the recent wet and mild weather has further impacted the group's short-term trading, reducing coal production and restoration activities.

Nevertheless, the company was confident profitability can be maintained even in the face of such severe market conditions, adding that it has already taken significant steps in reducing costs and restructuring the group.

Hargreaves said it was well positioned to generate substantial cash as stock and plant positions are unwound, despite the tough market conditions putting pressure on profit generation.

At 1030 GMT, Hargreaves Services shares were down 16% to 200.63p.