Hargreaves Services (HSP) CMD 2025 summary

Strategic focus and business structure

• Concentration on services and German HRMS businesses, with land business stable and generating capital through asset disposals, including renewables.

• Services business has grown profits at a 30% annual rate over the last five years, driven by robust contracts and market tailwinds.

• Operating model centers on inspiring people, delivering excellence, and winning more work, with a focus on large infrastructure projects.

• Blackwell Earthmoving and Industrial Services divisions are highlighted for their expertise, contract retention, and progressive employment practices.

• The business is positioned as niche in large-scale earthmoving and industrial services, with limited direct competition in the UK.

Market opportunities and growth drivers

• UK government’s ten-year infrastructure plan forecasts £725 billion in spending, a 20–25% increase over previous years, supporting long-term growth.

• Major projects include HS2, East West Rail, Lower Thames Crossing, Heathrow expansion, and significant reservoir construction, with earthmoving demand set to exceed HS2 levels over a longer period.

• Clean energy and environmental sectors offer opportunities in nuclear, renewables, energy from waste, and water infrastructure, leveraging existing expertise.

• Services business benefits from inflation resistance, strong free cash flow, and high-quality customer relationships.

• Sustainable resource sourcing and circular economy practices are integrated into project delivery, enhancing customer value and compliance.

German business and zinc recycling innovation

• German HRMS business includes trading, DK Recycling, and a new zinc processing venture, all ring-fenced and contributing to group value.

• DK Recycling processes low-zinc dust from glass furnaces, but faces challenges from market disruptions, tariffs, and steel sector decarbonization.

• New in-house zinc oxide recycling technology targets dust from electric arc furnaces with 6–40% zinc, addressing a market gap left by existing Waelz kiln technology.

• First plant, costing £18 million (with £6 million in grants/loans), to be operational in H2 2027, targeting a 20% ROIC and supported by strong customer demand and government backing.

• Technology offers lower carbon footprint, scalability, and potential for further expansion, with patent pending and letters of intent from major steel producers.