Hargreaves Services has warned that its transport division's operating profit may fall by £500,000 this year due a decline in the coal, steel and construction markets.

The warning came in a pre-close update issued by the County Durham-based company this week.

It said that the continuing deterioration in the coal and steel markets and unusually warm winter weather had created short term volume and margin pressure across the group.

Breaking the business into sector performance it said the transport division, which provides bulk material and waste transport logistics, had been hit by a fall in coal and rock salt transportation and a general decline in the construction industry sector.

In the year to 31 May 2015 Hargreaves Services' transport business reported an operating profit of £4.5m.

“Despite a strong start to the financial year, we have recently seen a marked reduction in general waste market flows following the downturn in the business of a significant North East landfill operator,” the company said in a statement.

A company spokesman declined to identify the landfill operator but added the business had won a number of contracts outside this reporting period, which should make the fall in profit no more than a blip.

Construction is expected to come back starting in the spring and the company has won a "significant" bio-mass contract from a client that can't b named at this time, he said.

Hargreaves recently adopted a franchise programme to boost subcontractor retention and create a more flexible fleet.

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