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[August 2007]
Hanson First Half Results; Go-Ahead for HeidelbergCement Deal
Highlights of Hanson Group first half results were as follows:-- Net cash inflow from operating activities £143.7 million (£106.2 million).
-- Net debt £1.6464 billion (£1.5748 billion).
-- Earnings per share – basic 22.5p (23.2p)
-- At constant exchange rates group turnover up 7% and operating profit up 5%.
-- Significant residential demand weakness in North America.
-- Adverse weather conditions impacting volumes in North America, UK and Australia.
-- Strong selling price discipline recovering cost increases.
-- Strong recovery from Building Products UK with operating profit up 146%.
-- Continued focus on future growth of business with £142 million invested in 10 acquisitions during the period with a further two acquisitions completed in July 2007.
-- Capital expenditure increases for plant upgrades and to improve efficiency and cost structure.Alan Murray, Chief Executive, said: "Hanson has delivered solid results against the background of challenging conditions. Our strong selling price discipline has been maintained and we continue to invest in the future growth of our business through acquisitions and capital expenditure.
"Yesterday, we were pleased to announce that shareholders approved, both at the Court Meeting and the Extraordinary General Meeting, the Scheme of Arrangement regarding the acquisition of Hanson by HeidelbergCement for 1100 pence per ordinary share. As anticipated, we therefore expect the acquisition to complete at the end of August, assuming all necessary approvals are received and conditions are satisfied or waived."
“The acquisition of Hanson PLC strengthens the position of HeidelbergCement as one of the leading building materials producers in the world,” commented Dr Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. “This is an important step in the reorientation of our Group strategy. Alongside our traditional core business of cement, we consider aggregates the other main strategic focus. Together with Hanson, we will become the world market leader in the aggregates business; we will have around 70,000 employees and achieve a turnover of approximately €15 billion.”
Hanson Group first half turnover was £2.0439 billion (£1.9982 billion), an increase of 2.3%. £49.9 million or 2.5% of this increase was due to acquisitions made in 2007, whilst foreign exchange translation reduced group turnover by £93.7 million, or 4.7%. At constant exchange rates, group turnover increased by 7.3%.
Operating profit for the first half of the year decreased by 0.8% to £226.6 million (£228.4 million). 2007 acquisitions contributed £3.5 million, whilst foreign exchange translation and lower property profits reduced operating profit by £12.6 million and £0.5 million respectively. At constant exchange rates, operating profit increased by 5.0%.
Poor weather, declining residential demand and foreign exchange translation reduced the operating profit contribution from the North American operations. However, this was broadly offset by strong improvements in the UK, Continental Europe, Australia and Asia Pacific.
Residential demand in North America continued to decline in the first half of 2007, resulting in reduced volumes for the majority of products, in particular brick and roof tiles. Despite the volume decline, aggregates selling prices continued to move forward robustly. In the UK, demand increased in a number of products, particularly brick and blocks and pricing moved forward.
Despite the volume reductions in some markets, price discipline has remained a core focus for the group. Price increases were achieved across most product lines. These increases were necessary to recover input costs that could not be absorbed through cost saving initiatives.
As it is anticipated that the recommended acquisition of Hanson by Lehigh UK Limited, a wholly-owned direct subsidiary of HeidelbergCement, will be completed in the third quarter of 2007, Hanson does not intend to pay an interim dividend.
www.hanson.com
www.heidelbergcement.com
ENDS