US Housing Bolsters Outlook For James Hardie

By Glenn Dyer | More Articles by Glenn Dyer

Suddenly housing is looking a bit brighter for James Hardie Industries which has upgraded its full-year adjusted net operating profit guidance in the wake of a solid performance in the six months to September 30.

But the improvement isn’t to be found in Australia where Hardie joined Boral and CSR in reporting weak earnings and expectations of more to come because of the slide in homebuilding.

The shares jumped sharply on Thursday after Hardie said in its earnings release that it now expects its adjusted operating profit to be between $US340 million and $US370 million for the year ending March 31, 2020.

That’s up from the previous forecast of $US325 million-$US365 million. It excludes one-off items such as compensation payments for asbestos-related illness claims.

It reported that adjusted operating profit for the first half rose to $US188.8 million, up 17% on the same period a year earlier. Group Adjusted EBIT stood at $US258.6 million for the half, 21% higher than the previous corresponding period.

Net sales were up 2% to $US1.3169 billion over the same period.

“We are pleased with our second-quarter performance, delivering Net Sales and EBIT growth in local currency in all three regions: North America, Asia Pacific, and Europe,” James Hardie CEO Jack Truong said in the filing to the ASX.

“It reflects our team’s continued good execution of our global strategic plan.”

The shares jumped more than 9% early to a record $27.05 before settling back a touch to end at $26.62, up 7.7%.

The reason for the upgrade is the improved outlook for the US housing sector – but it is a different story for Australia.

But while it raised the primary demand growth target range for its North American fibre cement operation to 4-6%, it warned it sees a “high single-digit percent contraction” in Australia’s housing market in the 2020 fiscal year amid a sector decline that has already prompted other warnings from the likes of CSR and Boral (and Brickworks as well).

Hardie will be an unfranked interim dividend of 10 US cents a share.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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