Strong Germany performance to lift Hargreaves Services results

Industrial and property service provider Hargreaves Services announced further improvements to its expected trading results for year ending 31 May on Tuesday, due to a strong performance at its German joint venture Hargreaves Raw Materials Services (HRMS).

The AIM-traded firm said results within both the HRMS materials trading business and its subsidiary DK Recycling und Roheisen were exceeding expectations.

Current commodity prices, specifically pig iron and zinc, were continuing to have a positive benefit on the results of both businesses.

The board said it was now confident that HRMS had sufficient visibility for the rest of the current financial year, and expected its contribution to Hargreaves' results in the second half to exceed that recorded in the first half.

It said that, while it was not possible to predict how long such favourable market conditions would exist, it now expected some beneficial impact to continue into the first half of the 2023 financial year.

Additionally, as a result of operational improvements at DK, it said future profitability from HRMS was expected to be at least 30% higher than current market expectations, even if current levels of commodity pricing were not sustained.

Hargreaves said HRMS was continuing to deploy generated cash to fund the working capital needed to support its current high levels of activity.

The rest of the group's businesses, meanwhile, were trading in line with market expectations.

“Whilst current market conditions are contributing to very strong HRMS results, I am particularly pleased to see the underlying improvements that the management team has implemented at DK, providing a reliable platform for sustainable future profitability,” said chairman Roger McDowell.

At 1317 GMT, shares in Hargreaves Services were up 12.55% at 538p.