16th Feb 2016 08:02
LONDON (Alliance News) - Solid fuel and bulk material logistics supplier Hargreaves Services PLC on Tuesday posted lower first half pretax profit and revenue, slashed its interim dividend and said it intends to reduce its exposure to thermal coal markets in the next 18 months following a tough half for the group.
For the six months to the end of November, Hargreaves Services said its pretax profit dropped to GBP800,000 from GBP15.2 million, as revenue plunged to GBP174.8 million from GBP351.2 million and it booked restructuring costs, as it sought to protect itself amid very challenging coal and steel market conditions in the UK.
The weak results meant the group slashed its interim dividend to 1.7 pence per share from 10.0p a year earlier.
As the tough conditions continue, the group said it will be taking action to reduce its exposure to thermal coal markets in the next 18 months, adding it expects profit to be constrained in the short-term but foresees substantial cash generation coming from stock and plant positions being unwound.
"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 eighteen 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," said David Morgan, chairman of Hargreaves Services.
"The recent wet and mild weather has further impacted the group's short term trading, curtailing coal production and restoration activities, however the board is confident that profitability can be maintained even in the face of such severe market conditions. The board has already taken significant steps in reducing costs and restructuring the group and these efforts are ongoing," he added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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