View from City Road: Hanson's new era leaves company in hiatus

It is surely no coincidence that Hanson decided to hold its first results press briefing at the same time as it failed to announce a dividend increase for the first time in its 28-year history.

It coincidentally announced a fall in its US operating profit - despite a stronger dollar - for the first time since Lord White set out to conquer the New World, and warned that, disposals apart, its interest bill would rise by pounds 275m this year.

Cynicism apart, however, yesterday's briefing was the clearest demonstration yet that Hanson has entered a new era.

True, there was no shortage of typical Hanson dogma - cash flow is king, anything is for sale at the right price, acquisitions remain a key priority. But Derek Bonham, chief executive, and his US counterpart, David Clarke, almost sounded like typical company bosses as they expounded the strategy and prospects of their main businesses.

It is also clear that, while Lords Hanson and White remain on board, Messrs Bonham and Clarke are running the show.

Their lordships may have chosen a propitious time to take a back seat. While they are, at last, talking about evidence of 'a positive recovery' it will take a significant improvement in trading to counteract the impact of the extra interest - equal to more than a quarter of last year's pre-tax profits.

The market was clearly unaware exactly how clever Hanson's treasurers had been, and the 16p fall in its share price shows their concern that such wizardry has pushed its earnings recovery another year out.

Operating profits should get a boost from the Quantum acquisition, which Mr Clarke hints is performing better than hoped.

The pounds 45m of disposal gains already locked in, coupled with the profit from the housebuilding float, should also push the pre-tax number ahead. But Mr Bonham could have to wait until at least 1995 before he can trumpet the benefits of his new focus on organic growth.

That will leave Hanson in a hiatus. It may claim it is still acquisition-hungry, but its disposal programme is a tacit admission that its 86 per cent gearing in effect rules out a significant purchase.

While disposal profits could be large enough to allow a small increase in the dividend, that would do little to alleviate the market's worries about the quality of Hanson's earnings. Mr Bonham and his team have a lot still to do.