Industrial group Hargreaves Services has raised dividends on the back of what it said was "strong momentum".
Announcing preliminary full year results for the year to the end of May, in which revenue jumped from £177.9m to £211.5m, the County Durham-based business said it had delivered high quality results driven by growth in its services division, which includes earth moving, bulk logistics and engineering, among other functions. Reduced profitability across the group's German raw materials joint venture meant overall underlying profit before tax was £27.3m, below the restated £30.4m reported for 2022, however.
A slump in commodity prices caused Duisburg-based Hargreaves Raw Materials Services GmbH's share of post-tax profits to fall 38% to £15.5m. But the joint venture was said to have made the most of price peaks in late 2021 and 2022, with the market now having returned to more normal levels.
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Across its land selling division, uncertainty in the housing market had caused some sales to be delayed and lower than anticipated profitability. However, the business hailed an £18.5m deal with developer Avant for a large plot at its Blindwells site in Scotland, which is expected to complete in January next year.
Speaking to BusinessLive as the results were published to the London Stock Exchange, Hargreaves said it estimated there was likely to be another two or three years of the earthmoving works on HS2, which has been a significant growth driver. Meanwhile bosses have their sights on future infrastructure works such as the Lower Thames Crossing and Sizewell Nuclear Power Station.
The prelims come just after the group announced a multimillion-pound plan to sell off thousands of acres of its land that is suitable for renewables schemes. Over the next five years it will dispose of a portfolio of more than £23m and return the proceeds to shareholders.
Nigel Halkes, acting group chair at Hargreaves, said: "The group has maintained its strong momentum built over the last few years and continues to demonstrate its resilience in the current challenging economic environment. The growth of a robust recurring revenue base in services is particularly pleasing and has provided the bedrock of performance for the group.
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"The outlook for the group's operations for the coming year and beyond is strong with over 60 term and framework contracts and 70% of revenue for the year already secured. The group remains focused on its strategy to create, deliver and realise value for shareholders, and I look forward to executing on our value realisation plans in our renewable energy land asset portfolio in the medium term."
Hargreaves proposed a final dividend of 6p, taking its full year dividend to 9p - an increase of 7.1% on the previous year. The group also said it intends to buy out two defined benefit pension schemes on the back of recent movements in gilts. The £15m move will mean Hargreaves no longer has to pay £1.9m annually in deficit reduction payments.