Mixed conditions for each of its different divisions has prompted North East-based Hargreaves Services to report a period of contrasts in new half-year results.
The County Durham group saw a substantial fall in pre-tax profits in the six months to the end of November to £2.7m, down from £18.7m in the same period of 2022. That was on reduced turnover of £110.2m compared with £116.5m.
Bosses pointed to a slowdown in the group's German joint venture specialising in raw materials to the steel, sugar and ceramics industries, among others. Hargreaves Raw Materials Services GmbH (HRMS) delivered a weaker, loss-making start to the year, as the group had predicted, saying that recent years of substantial profits would not be sustained.
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As the Duisburg-based business required less working capital, Hargreaves reiterated its confidence that the joint venture could continue to release at least £7m per year in cash to the group. Changes in the market - including EU sanctions on Russian pig iron imports - were said to give HRMS chance of better profitability next year.
It was a similarly subdued period of the group's land sales business which generated revenue of just £700,000 having booked £8.7m in 2022. The division swung to a pre-tax loss of £1m, compared with pre-tax profits of £1.6m due to the timing of sales at the group's flagship Blindwells site in Scotland, but post-period deals mean the division is on track to deliver its best ever full-year results.
However, performance was stronger across Hargreaves' main services division, which includes large scale earthmoving works it is carrying out for the HS2 project. Growth in that contract and additional engineering works meant the arm delivered first half revenues of £109.5m compared with £107.8m, and pre-tax profits of £7.8m, down from £8.5m.
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Speaking to BusinessLive after publication of the results, Hargreaves CEO Gordon Banham said he was confident of a bounce back in the German business and hailed the "big steps" taken to secure the buy-out of its defined benefit pension scheme. He said: "We're just in the process of finishing buying out the pension scheme that we inherited at Maltby - and that's only going to cost us £9m which means we can free up £2m a year that would have normally gone to that. It's great because it secures the future for those miners in a locked, insurance-backed scheme. That's an obligation to past employees.
"And it gives us a really clean balance sheet. Remember we have £18m of cash sitting in the bank and we don't have any borrowings except for lease debts so we're a really solid business."
Mr Banham also pointed to the group's £7m of renewable energy assets which it hopes to sell in the next three to five years for at least £27m. Hargreaves investors are now in line for an interim dividend of 18p, a six-fold increase on last year.