Hargreaves Services shares plunge after profit warning
British coal supplier and transporter Hargreaves Services said up to £16m will be wiped off next year’s profit due to difficulties at the company’s Maltby coal mine in South Yorkshire.
The company said on Monday it estimated that delays resulting from unusual geological conditions encountered when it started mining a new coal seam will reduce profit in the twelve months to 31 May 2013 by between £12m and £16m.
Profits in the current year will not be affected, the company said, adding that the incident would not have a material adverse impact on the group’s medium or long term prospects.
Its shares dived by 29 per cent after the announcement.
Hargreaves believes the incident at Maltby, which involved pulling back operations because of safety concerns after water, oil and gas seeped into a new section of the mine which it was trying to open up, to be a one-off.
“This is a very unusual situation and to our knowledge this has never happened before in Maltby’s long 100 year history. It is highly unlikely that these conditions will be found again in any subsequent panels,” Production Division Director Gerry Huitson said.
Maltby employs 500 people and its coal is primarily used to supply the Drax Power Station, Europe’s largest coal-fired power plant in North Yorkshire, which is owned by British power producer Drax.