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Hanson benefits from cost-cutting drive

Brickmaker Hanson today said its UK aggregates business is starting to see the benefits of last year's shake-up as it forecast first half operating profits 20 per cent ahead of last year's £165.5 million.
Hanson said the division, which has a new management team, is on target to save costs totalling £10 million a year.

The group said the unit's operating profits and margins are expected to be significantly higher than during the first six months of 2004.

It said its other big division in the UK, building products, experienced weaker demand, with first half volumes for traditional-designed brick in 2005 expected to be below the first half of 2004.

However, price increases helped boost the division's first half operating profits to levels above the first six months of 2004.

Hanson said in a trading update ahead of its first half results on August 3: 'Overall, Hanson expects further progress in the second half of 2005, albeit against a strong second half in 2004.''

Hanson is the world's biggest producer of aggregates and concrete pipes and the third largest ready mixed concrete manufacturer.

The group also makes clay bricks and concrete roof tiles and has operations in the UK, North America, Australia, continental Europe and the Asia Pacific region.

It said it expects its aggregates operations in North America to increase operating profits and underlying margins in the first half compared to the first half of 2004.

The improvements were driven primarily by higher selling prices and the benefit of cost reduction measures, offsetting reduced property profits of about £8 million and higher input costs.

The North American products arm built on a strong performance in the second half of last year and operating profits are set to be significantly ahead of 2004.

Operating profits at Hanson Continental Europe are forecast to be weaker against a very strong first half in 2004.

Several Hanson US subsidiaries are defendants in a number of lawsuits alleging bodily injury due to exposure to asbestos-containing products before 1984.

Hanson said about 7,500 new asbestos claimants are expected to file in the first half of 2005, leaving outstanding claimants at the half year standing at about 139,250 compared to 135,750 at the end of last December.

Hanson's shares rose in April after the US moved closer to creating a compensation fund for victims of asbestos-related illnesses.

Hanson said today that it supports Federal reform, but added it believed the likelihood of success remained uncertain 'given the complexities involved and the political nature of the process through the Senate and House of Representatives.'

'In the meantime, Hanson's subsidiaries will continue to litigate and to negotiate for additional insurance cover,' it said.

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