Construction surge keeps Hanson upbeat despite dip in first half profits

Click to follow
The Independent Online

Hanson, the UK's biggest building company, remained upbeat yesterday despite the current gloom that is clouding global economies and said it sees the outlook for its businesses improving even though first-half profits dipped slightly.

Pre-tax profit before exceptionals fell to £129.2m in the six months to 30 June, compared with £131.9m in the same period a year ago. But the company said it was confident with house broker ABN Amro's £325m annual profit forecast for Hanson. The positive note from ABN was given added weight when analysts at JP Morgan subsequently raised their forecast for Hanson's annual profits from £327m to £337m.

Trading in the first half was slightly ahead of expectations, largely due to a good performance by the US business ­ surprising given the weak state of the US economy ­ but also in the UK.

Jonathan Nicholls, the finance director, said: "We are pretty pleased [with the results] as the business is cyclical with a bias to the second half. We set out at the beginning of the year that we would be more inward looking. That is exactly what we have been doing."

Slight progress has been made in the UK market. Overall, the market is down but the company has picked up quite a few contracts, notably the M5 and A2/M2. Mr Nicholls said: "We have also pushed forward prices. Last year margins were hit by oil and natural gas related increases."

But he admitted there would be a "tiny" decrease in the size of the UK workforce. "We have been integrating and consolidating around the world and it has meant redundancies," he said.

Trading in the US, which is expected to account for more than 60 per cent of trading this year, has had an encouraging start to the year, said the company. Mr Nicholls said: "We have had a pretty good half with profits ahead of or equal to budget. Housing is still very robust. We had anticipated it would have come off by now but it continues to be strong."

But he said Israel and in particular Germany, where there has been a complete fall-off in construction activity, have continued to be difficult. Australia, where Hanson bought the onstruction business Pioneer last year, has also been difficult, mainly in residential housing, but Mr Nicholls said it appeared to be "picking up".

Over the last six months the group, which employs 28,000 worldwide, has refocused on its core strengths and is focusing on margin control and efficiency. Various disposals have been made, including its UK waste management business, which Hanson sold in January for £185m. Hanson has also reduced its debt by £110m to £1.7bn.

Comments