Hargreaves confident despite ‘problem child’

The coal supplier and transporter, which said in a trading update yesterday it expects to post full-year results in line with expectations, pulled back operations at the South Yorkshire coal mine following safety concerns after water, oil and gas seeped into a new section of the mine which it was trying to open up. The company said that its Maltby site had a “challenging first half”.

Gordon Banham, chief executive, told the Yorkshire Post: “Instead of having a big panel which was 2.5km deep, we are only going to have a panel of coal that’s 1.9km deep because we’ve had to close that part of the tunnel that delayed the mine starting up.”

The company estimates that the gap in production at Maltby, where it employs 500 people, will reduce profits in the 12 months to May 2013 by between £12m and £16m. Profits in the current year will not be affected. Mr Banham, who said that this was the first such incident in Maltby’s history, added: “We won’t really know the impact until October or November.”

Yesterday, the company said: “Although the recent developments at Maltby were disappointing, Hargreaves is a diversified group focused on a broad range of activities associated with the supply of solid fuel and the board remains confident about the medium and long-term prospects for the group.”

Meanwhile, the firm reported that its industrial services division had “an exceptionally good year” benefiting from contracts in the steel sector. It continues to progress its business development activities in Asia.

Energy and commodities has experienced good trading in the UK but lower volumes in Europe as a result of lower trading flows, while the transport division has had “a solid year”. Mr Banham said: “The outlook is very good in the three divisions. It’s just Maltby that’s the problem child.

“Every week the mine doesn’t produce coal it costs £1m.”

Before the geological problem encountered at Maltby, the mine was “on track to improve its performance”. The group’s net debt was lower than forecast at £78m. Analysts at Charles Stanley Securities said they maintain their financial year 2012 forecast of £47.7m for pre-tax profits.

The group expects to report its preliminary results for the year to the end of May 2012 on September 25.