Hanson warned yesterday that profits would be hit by higher costs from asbestos-related lawsuits and pension-funding requirements. The company also said that trading had turned out to be weaker than expected.
The group's shares closed down 8.6 per cent at 337p, the biggest faller in the FTSE 100. Earlier this year, Hanson had assured the market that its asbestos liabilities were covered for the next eight years, with a $235m (£142m) provision against legal claims. Yesterday the company was forced to raise this to $320m. That means a £40m exceptional charge will be taken in the first half, net of tax benefits.
Hanson revealed that the number of claimants it counts has risen from 81,500 at the end of 2002 to 120,000 now, due to a "more conservative approach to recording claimants". In the first half of 2003, settlements cost the company $20m.
Hanson has the greatest exposure of any large UK company to the multi-billion dollar litigation in the US from people who were exposed to the potentially deadly material asbestos. However, Hanson came out fighting against the legal threat, saying that 99 per cent of the cases against it are believed to relate to non-malignant diseases. It said it was common practice to name all the 200 main companies that used asbestos in a legal action.
"The majority of their claims were filed more than five years ago and allege exposure at sites where no Hanson subsidiary products are believed to have been used or made. This reflects the spurious nature of the vast majority of the claims made by these and many other outstanding claimants," Hanson said.
David Taylor, analyst at Teather & Greenwood, said many companies had been forced into bankruptcy by the weight of asbestos claims.
Hanson highlighted two other problems, meaning that analysts cut profit forecasts for this year by up to 10 per cent yesterday. The company said it would need to take a £25m charge for greater funding of its pension scheme. In current trading conditions, the group pointed to a number of negative factors, including adverse weather in parts of North America.
Hanson said: "First-half results are anticipated to be down on the prior year pre-tax [profit] ... Despite these factors and although it is still early in the construction season, the second half is anticipated to be more resilient."
Previously, analysts had expected a strong second half of the year to make up for the poorer first six months, leaving 2003 as a whole flat on the previous year.Reuse content