The UK building industry had a poor last quarter, worse even than the third quarter according to brick to concrete and aggregates group Hanson in its year end trading statement.
Chief executive Alan Murray says as the group doesn’t expect a major increase in 2006 production of some Hanson (HNS) products is being reduced. Production at four brick production plants, for example, will be suspended next month.
Murray thinks the New Year will start slowly and doesn’t see a major recovery until 2007 when Hanson will be helped by a return to the building of single dwellings as opposed to flats which dominated this year’s market, a trend Murray doesn’t believe is sustainable.
Higher energy costs will continue to drive up prices, the first being bricks which will go up £5-6 a tonne. The energy bill for 2005 is expected to be between £40-50 million, up 25%. Natural gas accounted for between £10-20 million.
Gas looks like rising 40% further in 2006. Hanson is 60% hedged against this in the UK and 50% in the US.
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