Hanson in the spotlight as consolidation gathers pace

Hanson in the spotlight as consolidation gathers pace
Published: 01 August 2005

The current takeover activity in the heavy building materials and aggregates sector has once again put the spotlight on Hanson PLC and investors will be keen to hear the company’s comments on the latest round of consolidation when it reports its interim results next Wednesday.  Saint-Gobain SA’s approach for plasterboard group BLB PLC and Spohn Cement’s bid for HeidelbergCement AG have rekindled interest in the sector and some analysts believe it is only a matter of time before Hanson falls to a predator.  Any bidder, however, is likely to have to pay a hefty premium to take control given the depth and strength of Hanson’s trading operations in North America and the UK.  
 
In a recent trading update, the group said it expected a 20 per cent rise in first-half operating profits, buoyed by its strong US and UK businesses, the benefits from acquisitions and cost savings. On this basis, investors can expect first-half operating profits to show a rise to almost UK£200m, compared to UK£165.6m. Higher selling prices have also helped to offset continued increases in raw material prices.  
 
The group has also spent UK£300m on acquisitions in the first half of 2005. While this will see debt increase to around UK£850m, the group’s strong cash flows should see this reduce in the second half of the year. Investors also look for an increase in the interim dividend.