Hanson up 26% as recovery gathers pace

THE PACE of recovery in Britain and the US is accelerating, according to Hanson, the industrial conglomerate, which yesterday reported a 26 per cent rise in pre-tax profits to pounds 965m in the nine months to June.

The results were boosted by a pounds 116m contribution from Quantum, the US chemicals company acquired last September, although that was offset by the pounds 80m cost of the coal strike that affected its Peabody operation. The strike, which has now been settled, cost pounds 50m in the previous period.

Christopher Collins, director of corporate deveopment, estimated that underlying growth in operating profits was about 12 per cent ahead of the previous year. That compares with an 8 per cent rise, on a like-for-like basis, at the half- way stage.

Derek Bonham, chief executive, added: 'The result reflects an improving trend and the brighter picture evident at the half-way stage has been confirmed. In the third quarter, conditions continued to improve and the outlook is good.'

Profit before tax in the third quarter was pounds 282m, including a pounds 46m contribution from Quantum, up from pounds 256m last time.

The results were in line with expectations in the City, which has been expecting Hanson's chemicals, aggregates and forest products businesses to recover strongly from the recession. Nigel Utley, conglomerates analyst with Nomura, pointed to the better-than- expected contribution from Quantum, in particular, as evidence of the effect of recovery.

Mr Collins said three recent price increases at Quantum did appear to be holding, while the aggregates and other chemicals businesses were also managing to raise prices.

The benefits of recovery are dampened by the costs of servicing its pounds 3bn debt, largely the result of the pounds 2.2bn Quantum acquisition. Interest costs were pounds 176m, compared with a pounds 35m credit last time. The group has been selling businesses - the float of 63 per cent of Ertl, its US toy company, was announced on Monday - and analysts expect debt to fall to about pounds 2.5bn, or 50 per cent of net assets, by the year-end.

Hanson also announced that it is to buy the coal interests of Exxon, the oil company, for an undisclosed sum.