Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Hanson warns increased energy costs could hit 2006 earnings

Hanson, the world's largest supplier of sand and gravel, is expecting pre-tax profits to rise by up to 13 per cent in 2005 when it announces its figures for the year ended December 31, but it warned that increased energy costs could affect profits in the first half of 2006.
Shares in the company fell by almost 2 per cent on the news.

Hanson achieved the improvement in profits despite a big rise in operational costs and a difficult second half of 2005 for the UK housing market. The company's UK building products business saw demand for bricks fall more than 10 per cent over 2005, the firm said.

Pre-tax profits are forecast to be around £425 million compared to £377.1 million in 2004 after it managed to sustain price increases for its products. Operating profits are likely to increase by a similar percentage to about £479 million, up from £423.9 million last year.

Hanson produces aggregates such as crushed rock, sand and gravel, concrete products, clay bricks and ready mixed concrete. Its other main product lines include asphalt and concrete roof tiles.

Forward hedging of gas prices had helped offset some of the impact of fuel cost rises - but ate into earnings which are expected to be in line with 2004, despite new acquisitions. These included brickmaker Marshall Clay Products with sites in Accrington, Lancashire, and Barnsley and Swillington, both in Yorkshire.

A shake-up of Hanson Aggregates UK last year saved £10 million in 2005, the company said, leaving earnings and margins to be 'significantly' above 2004 despite a fall in demand for aggregates and ready-mixed concrete.

It said US aggregates prices rose by 8 per cent with 10 per cent rises across other product lines to return a strong increase in profit on 2004 while earnings are expected to be down on last year in continental Europe but ahead in Australia.

Total acquisitions across the group totalled £340 million.

Chief executive Alan Murray said: 'Hanson has delivered significant growth this year through increased earnings, increased acquisition spend and increased total shareholder return.

'We continue to deliver high quality products and services to our customers at prices which, whilst competitive, reflect the increased costs faced by us and the industry at large.'

The company also warned today it would step up payments to deal with claims brought by asbestos victims. Several of Hanson's US subsidiaries are defendants in lawsuits alleging bodily injury due to exposure to asbestos-containing products before 1984.

This year it paid around £24.8 million in settlements and legal fees - but warned it was likely to need £33.8 million annually for the next eight years. There are around 132,500 outstanding claimants.

Contact the newsdesk