Hargreaves Services plunges as conditions in thermal coal markets remain weak

Shares in Hargreaves Services plunged on Monday, after the group said conditions in the thermal coal markets remained difficult.

The London-listed company, which supplies solid fuel and bulk material-related services, said thermal coal markets were “very weak” throughout the year, as prices fell by approximately £1 per tonne, with “exceptionally low” demand in the UK.

In a trading update on Monday, the group said it has cut its thermal coal sales estimates leaving its guidance 0.5m tonnes lower than the initial estimates of approximately 1m tonnes for the 12 months to May 2016.

Meanwhile, the group said it remained confident the liquidation of the Sahaviriya Steel Industries steelworks in Redcar, which will cost the group £1.5m, will be manageable.

Hargreaves said it will be left with coal and coke stocks worth around £14m, although it expects to be able to sell the stocks over the next year.

The company added it forecast to book approximately £700,000 in redundancy costs related to the closure of the Longannet, Ferrybridge and Eggborough plants, and from the recent decision by power company E.ON to close operations at the Liverpool Bulk Terminal.

Hargreaves said it expects the closure of the plants to translate into a £1.5m hit to its operating profit in the year to May 2017.

Hargreaves shares were down 10.83% to 308.75p at 1437 BST on Monday.