COAL and transport firm Hargreaves Services has seen revenues fall amid market conditions the County Durham company described as "unprecedented and very challenging."

Revenue dropped by £109.3m from £460.5m in the six months to 30 November 2013 to £351.2m in the six months to 30 November 2014.

Hargreaves said it has faced a number of significant challenges arising from the well documented weakness in the coal price and turmoil in its coal and coke markets and this has meant that the first six months of the year were a very difficult period for the group.

The Esh Winning business said its group simplification and the debt reduction strategy were progressing well. These initiatives have included the sell-off of the Imperial Tankers operation in Stockton, and the closure of the Monckton coke operation, near Barnsley.

Underlying operating profit for the first six months was £21.9m, a reduction of £9m compared with the comparative period mainly reflecting the impact of lower volumes on its energy and commodities division.

Underlying profit before tax was £20.3m compared with £28.5m for the comparative period. The simplification programme resulted in a one-off net charge of £4.7m to reported profit before taxation.

Chairman Tim Ross said:"The market conditions we are currently experiencing are unprecedented and very challenging. The Group simplification programme and focus on reducing debt ensures that the group is well placed to weather the current difficult trading conditions for such time as they persist. Although there are challenging times to face in the coming financial year the group is expected to continue to be profitable and to generate meaningful surplus cash.

"Reflecting the group's inherent strength and solid financial position, the board has the confidence to increase the interim dividend in line with prior guidance. Although we are unable to control factors such as coal price and coal demand, the management team is proactively taking all the sensible steps and measures to manage current market conditions whilst leaving the group well placed to benefit when the market improves."