17th Feb 2015 08:00
LONDON (Alliance News) - Hargreaves Services PLC Tuesday reported a significant fall in profit for the first half of the year as revenue declined, but the company increased its interim dividend in line with its previous guidance.
For the six months ended November 30, the supplier of solid fuel and bulk material logistics reported a 49% fall in continuing profit before tax of GBP15.2 million from GBP29.7 million a year earlier, whilst underlying profit before tax fell by 29% to GBP20.3 million from GBP28.5 million.
Pretax profit fell due to the decreased revenue in the first half, tumbling to GBP351.2 million from GBP460.5 million a year earlier, a fall of 24%.
But the company increased its interim dividend to 10.0 pence per share from 8.8 pence, a 14% rise. Hargreaves said it will recommend total dividend payments for the current year which it judges to be sustainable in terms of cash cover, even if the short-term pressure on profits results in the target payout ratio being exceeded during the following financial year ending May 31, 2016.
"Reflecting the group's inherent strength and solid financial position, the board has the confidence to increase the interim dividend in line with prior guidance," said Chairman Tim Ross.
During the first half, Hargreaves more than halved its net debt to GBP40.4 million from GBP95.2 million and reported a cash balance of GBP21.1 million at the end of November.
"The group simplification programme and focus on reducing debt ensures that the group is well placed to weather the current difficult trading conditions for such time as they persist," said Ross.
"Hargreaves has faced a number of significant challenges arising from the well documented weakness in the coal price and turmoil in our coal and coke markets, and this has meant that the first six months of the year were a very difficult period for the group," said the company.
Hargreaves is planning on reducing its fixed overheads by GBP3 million before the end of the financial year in response to lower commodity prices, it said.
Hargreaves said its current trading is "broadly in line with management expectations" as the company's coal contracts and hedges are providing protection from lower coal prices until the end of April 2015, but warned that the demand for thermal coal beyond April is "very poor".
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Hargreaves Serv