Hargreaves Services of County Durham says its German joint venture is trading ahead of market expectations, thanks in part to rising commodity prices.
Hargreaves Raw Materials Services GmbH (HRMS) – a supplier of industrial raw materials including solid fuels, refractory minerals, pig iron as well as ferroalloys and metals – is expected to generate profits 30% above current expectations of the market.
In a trading update for investors, Hargreaves said HRMS subsidiary DK Recycling Roheisen GmbH exceeded expectations and noted that commodity prices, particularly pig iron and zinc, were benefiting both companies.
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Hargreaves said the “operational improvements” in the DK business meant that future HRMS profitability should be at least 30% above current market expectations, even if current commodity price levels are not sustained.
The company said the visibility was such that it expected HRMS’ contribution to Hargreaves’ second-half results to outpace the first half – and that while the market could not be predicted, it expected on favorable terms during the first half of the fiscal year ending in May. 31, 2023.
Roger McDowell, Chairman of Hargreaves, said: “While current market conditions are contributing to very strong HRMS results, I am particularly pleased to see the underlying improvements that the management team has implemented at DK, providing a reliable platform for sustainable future profitability.
Hargreaves also noted that HRMS continues to deploy the cash generated to fund the working capital needed to support the current high levels of activity.