US strike dents Hanson: Fall in gains from asset sales leaves profits down 15.7%

Click to follow
A STRIKE in its US coal mines and a drop in gains on the sale of assets caused a 15.7 per cent fall in pre-tax profits at Hanson, the industrial conglomerate, in the nine months to June.

The group made pounds 763m before tax in the period, down from pounds 905m last time, on sales 16 per cent higher at pounds 7.1bn. The results of the previous period were boosted by a pounds 141m exceptional credit, mainly profits on the sale of Ever Ready and its 2.8 per cent stake in Imperial Chemical Industries. This year, the figure was pounds 30m.

Hanson had already warned that the strike at its Peabody coal subsidiary, which began in May, would cost it pounds 29m and losses are running at about pounds 15m a month. Profits at the subsidiary fell pounds 34m to pounds 73m, despite a first-time contribution from the Australian mining business acquired at the beginning of the third quarter.

Lord White, chairman of the group's US operations, said the mineworkers union had agreed to resume negotiations on ending the strike.

Profits in the third quarter, which bore all the strike costs, dropped from pounds 405m to pounds 256m, again largely because of exceptional items. At the operating level, profits were pounds 10m lower at pounds 266m. That was despite a weakening of the dollar - this year's results were translated at a rate of dollars 1.4935 compared with dollars 1.8920 last time - which, analysts estimate, added up to pounds 60m to profits, most of it in the third quarter.

The group could not comment on the underlying performance of its businesses because it is drawing up the offer document for the purchase of Quantum, the US chemical group, agreed last month. That should be available by the end of August and will contain a detailed trading statement. Hanson is paying dollars 700m ( pounds 470m) through the issue of American depositary receipts, and is assuming dollars 2.5bn of debt.

But Lord Hanson said the results 'reflect the gradual upturn in the US and UK economies and we shall take advantage of these improvements as they occur'.

Earnings per share were 11.5p, down from 15.7p last time, and the next quarterly dividend, of 2.85p, will be paid in October. The shares, which have been strong recently, closed 3p lower at 252.5p. Analysts forecast profits of just over pounds 1bn for the full year, down from pounds 1.3bn last time.