Hargreaves Services is to "ration" expenditure in its logistics division after it suffered a 91% fall in operating profit last year due to competitive pressure.

Operating profit plunged from £1.2m to £100,000 in the year to 31 May 2017, as turnover dropped 11% to £48m (2016: £54.4m). It said this reflected its transition from a focus on coal movements to more diverse volumes in the waste, construction and biomass sectors, as well as pressure on subcontractor margins.

Hargreaves said the division’s management team had been bolstered to adapt to new demands and put in place a series of steps to reduce costs, improve efficiency and update commercial terms.

“The market for the logistics business has been difficult, reflecting increased competition and soft volumes, which created significant challenges towards the end of the year,” the company said.

“A programme is already underway to re-shape the operation and reduce overhead costs.”

Hargreaves Services said it was seeking to “ration” expenditure in the logistics business, as well as its UK coal distribution arm. It said the divisions offered limited growth opportunities and it would run both operations to “maximise long term cash generation”.

“In terms of strategy we will prioritise management attention and capital allocation to property and European coal distribution where the value creation opportunity is considered greatest,” it added.

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