The Investment column: Hanson ends with a whimper

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The Independent Online
Hanson's final results announcement before its break-up begins on 1 October was a low-key affair. The company did not even bother to brief analysts on the figures, so academic have they become and so in line with expectations. The conglomerate that once bestrode corporate Britain like a colossus is slipping out the back door.

For what it is worth, the problems afflicting Quantum and SCM in the chemicals arm (Millennium from October) continued and the division's profits collapsed in the third quarter to June from pounds 136m to pounds 70m. That shortfall was made up for by a jump in the Eastern Group-to-Peabody Energy arm from pounds 40m to pounds 103m. Tobacco and building materials trundled along at much the same level of profits as last year.

In aggregate, operating profits for the quarter were more or less unchanged at pounds 350m (pounds 346m), while in the nine months they increased from pounds 921m to pounds 988m. The reported figures in the table are distorted by a number of one-off items, the most important of which was the pounds 608m exceptional profit on the sale of Cavenham Forest Industries, Suburban Propane and a few other non-core businesses, less a pounds 39m write-off of SCM's sulphate manufacturing assets.

Of more importance in recent months have been the roller-coaster expectations regarding the ultimate value of the four demerged businesses. A consensus of somewhere between 160p and 175p appears to have been formed, but numbers from 160p to as much as 225p have enjoyed currency.

That has made valuing Hanson's shares next to impossible, a situation stock markets hate. In those circumstances, investors normally err on the side of caution and so it is little surprise that the shares have lost almost a fifth of their value relative to the market since the beginning of the year.

The picture is still a great deal hazier than investors would like and is likely to remain so for the next week or so until documentation regarding the planned demerger of Imperial Tobacco and Millenium is published.

Once the split has taken place (Energy follows the other two at the beginning of next year), attention will focus on each company's merits: tobacco as a mature, safe cash cow; chemicals as a growth but highly cyclical stock; energy as a solid Anglo-American utility; rump Hanson as a dull bricks and cranes business operating in mature markets. None of it is going to set investment pulses racing.

If analysts have finally got the numbers right, the share price, down 2p yesterday to 166.5p, is about right. Anyone unfortunate enough to have become a Hanson shareholder during the past 10 years can only realistically hang on and hope for the best. For potential investors, the shares are a gamble on Imperial or Millenium becoming a bid target, although neither seems a foregone conclusion.

With a forecast dividend of only about 6.2p, compared with the inflated 12p the payout reached in the group's dying days, a yield of 4.6 per cent provides little support and the shares are likely to drift. More of a whimper than a bang, a sad end to an industrial legend.

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