BOSSES at County Durham coal miner Hargreaves Services are confident they can weather a turbulent period in the industry which has seen pre-tax profits halved.

The Esh Winning firm noted that the past twelve months has seen "a perfect storm" of low coal prices and a collapse in UK coal import volumes which has adversely affected the whole sector.

Continuing pre-tax profit fell 52.2 per cent to £24.9m from £52.1m in the year to the end of May, and revenue dropped by almost 24 per cent to £662.2m from £869.2m.

Hargreaves fear that David Cameron's government is determined to further diminish the role of fossil fuels as a means of powering the UK.

"Whilst we still believe the UK coal markets will offer opportunity for the group over the coming years, especially if coal prices improve, the events and developments over the past few months demonstrate that the political will to accelerate the removal of coal from the UK energy mix through energy policy and taxation is even stronger now than it was twelve months ago," Hargreaves said this morning in a trading update.

Gordon Banham, chief executive of the mining and transport firm, said: "We find ourselves working in the most challenging markets that I have ever experienced in more than thirty years of working in the coal sector. However, we have a talented and hard-working team, a strong balance sheet and an intimate understanding of the sectors in which we work.

"I am confident that whilst we still face challenges, we are well positioned to work through this period of turmoil and find opportunities to optimise the value of our considerable assets and skills base.

"We have highlighted the key principal risks that we have faced as a business in the past few statements and these remain unchanged as we enter this financial year. Coal price (with its impact on our mining operations) and low thermal coal demand (as UK coal stations seek to clear excess coal stocks) are the two keys risks we face.

He added: "We will continue to review the viability of and investment in our mining operations in light of coal price movements. We will also continue to press Government for a solution to deal with the significant restoration liabilities faced by the taxpayer. Such a solution would allow the whole industry to deliver much needed restoration and safeguard many more jobs while we await a coal price improvement. We are very well placed to supply these restoration services should the opportunity arise and we are well placed to benefit from our production operations should coal prices recover.

"The other key risk we face is around UK thermal coal volumes. We have assumed in our annual planning that coal trading volumes will recover in the second half of the financial year. Whilst this assumption remains a risk as we have no visibility of orders or demand at this time, based on our knowledge of the market and activities of power station operators we do not believe this is an unreasonable assumption to make.

"Therefore we will continue to monitor that position extremely closely as we go into the winter. Assuming that coal burn returns to a normal level in the winter we would expect to resume shipments after the end of the calendar year."

Hargreaves said strong cash generation and underlying profit performance prompted the board to recommend an increase of 19.8 per cent in the final dividend from 16.7p to 20p – bringing the full year dividend to 30p.

Restructuring at the firm, which included the sale of Stockton-based Imperial Tankers last year and the closure of Monckton coke works, generated a £67.8m reduction in net debt over the year.

Chairman Tim Ross said: "The last two years have presented the coal industry with extremely challenging market conditions. The Board has worked hard to ensure controllable risks are managed and to minimise the impact of risks beyond our control. We were clearly right to initiate the Simplification Programme last year. With a significant restructuring exercise largely behind us, we can concentrate on our strategic options to deliver future shareholder value."