Hanson defies City forecasts by raising dividend

HANSON, the industrial conglomerate, yesterday pleased the City with an upbeat statement on trading and an unexpected increase in the quarterly dividend.

Derek Bonham, Hanson's chief executive, said: 'The first half of the year was marked by clear signs of an emerging economic recovery in the UK and an improvement in the US. The outlook is improving and almost all our businesses are enjoying increases in volumes and margins.'

The brighter prospects, and the end of the US coal mines strike, gave it the confidence to increase its quarterly dividend by 5.3 per cent to 3p. The next payment will be on 1 July.

The group held its dividend for the year to September 1993, the first time it had not increased the payout since it was founded in 1965. Most analysts had expected no increase until the end of the current year.

Group profits for the six months to March rose by 35 per cent to pounds 683m, on sales 16.7 per cent ahead at pounds 5.6bn. Earnings per share were 9.9p, up from 7.7p. The shares closed 5.5p higher at 268.5p.

The rise was partly due to a pounds 333m profit on the sale of businesses - notably the flotation of the Beazer housebuilding business - and the acquisition of Quantum, the chemicals company. The coal strike cost pounds 80m, however, bringing the cost since it began last June to pounds 205m.

Hanson calculated that underlying profits, excluding acquisitions and disposals and the cost of the strike, were 8.4 per cent ahead at pounds 453m.

The pounds 817m proceeds from the sale of businesses helped cut group borrowings to pounds 3bn, or 69 per cent of net assets. After the Quantum deal, these had risen to pounds 3.4bn, or 86 per cent of net assets.

No more disposals are likely this year, although some US businesses may be sold off next year.

Profits in Britain dropped slightly to pounds 158m, largely because of a poor performance from Grove Crane and SCM chemicals - both of which had significant US sales. Imperial Tobacco, the cigarette business, held profits at pounds 141m despite a 4.3 per cent fall in demand, as its market share rose to 36.5 per cent.

The aggregates businesses benefited from the recovery in the building market, and profits rose pounds 15m to pounds 17m. Cavenham, the forest products business, reported a record pounds 60m profit, up pounds 10m. Quantum chipped in pounds 70m, covering its pounds 40m financing costs.