Hanson hit by higher energy costs

Higher energy prices will cost Hanson £25m in the second half

The UK building materials group Hanson on Monday said higher energy costs would hit its second-half profits.

In a trading statement, Hanson said: "The impact of higher prices will be approximately £25m in the second half and £40m for the year as a whole."

Hanson also said its UK business had been damaged by the recent severe weather which had restricted building site activity.

However, it said the outlook remained positive for 2001.

Hanson said the fundamentals remained sound in its biggest market, the US, which accounts for about 50% of group turnover.

Increased cost savings

"Overall [US] like-for-like aggregate volumes are expected to remain at similar levels to the current year," Hanson said.

Hanson also said state spending on transport infrastructure in the UK would benefit its quarry products division.

And integration of Pioneer - the Australian building products group Hanson acquired for £1.5bn - was proceeding well.

The estimate of the cost savings to be achieved in the acquisition had been increased to £30m a year from £25m, Hanson said.

Israel dampener

Hanson said it had raised selling prices across all major product categories but it had been unable to recover the energy cost increases.

Other factors dampening profit expectations included unrest in Israel and a decline in Australian demand following the Olympics.

"Assuming normal weather patterns for the remainder of the year, the group anticipates that pre-tax profit before exceptional items for 2000 is likely to be below last year's £314.3m, albeit not by a material amount," Hanson said.

Investors took a dim view of the profits warning. Hanson shares fell 7.5% to 343 pence within two minutes of the market opening.