Hargreaves Services H1 profits up but production takes hit

11th Feb 2014 07:56

British mining and transport group Hargreaves Services boosted half-year profit by a quarter, but pricing pressures in the coke market and delays in Scotland hit production.Hargreaves said a continuing strong performance from its UK coal operations and a contribution from seven newly acquired Scottish surface mines helped it lift underlying operating profit by 25.1% to £30.9m in the six months to November 30th.But the company said its production division was performing slightly below expectations due to delays in starting operations in Scotland and continuing pricing pressures in coke markets.Hargreaves, which has nearly 3,000 staff working in mines, coking works, docks, warehouses, depots, offices and trucking operations in the UK and mainland Europe, said it had had a tough year and coal prices had carried on falling during the period.It said it believed its mining operations were capable of achieving acceptable returns at current coal price levels, but added: "Should coal prices improve, we would expect to see a significant increase in the profitability and potential scale of the surface mining business."It also said pressure to replace coal-fired power plants in the UK with more environmentally-friendly power generation would inevitably reduce the market, but the decline may be slow due to short-term energy costs, uncertainty around gas supplies and delays in developing new power stations and wind farms."We remain of the view that despite current energy policy, coal will continue to have a significant role to play in the UK's transition from fossil fuel-based generation to renewable generation for many years to come," Hargreaves said.It added that it was increasing the interim dividend by 27.5%, from 6.9p to 8.8p per share. It said: "The board remains confident of achieving its expectations for the full year."Shares in the group rose 9p or 0.69% to 1,313p in early trading in London.PW