Building products maker James Hardie has lifted profit and expects a continued recovery in the Australian and US housing markets to drive further growth.
The company achieved an 11 per cent rise in operating profit in the three months to December to $US48 million ($A61.6 million), as sales increased across the US, Asia Pacific and Europe.
It expects to make an operating profit between $US210 million and $US222 million for the full fiscal year, which ends on March 31, which would be a 12 per cent improvement from the 2013/14 year.
But that will depend on a continued recovery in the US housing market, where it makes the majority of its earnings, and no drastic changes in the value of the Australian dollar, James Hardie said.
The US housing market was improving, but its recovery had been softer than expected, chief executive Louis Gries said.
“While our operating environment in the US has improved marginally compared to the prior corresponding quarter, we are yet to see the previously anticipated accelerated growth in the US residential market,” he said.
“When we look at the US housing market, and the broader US economy as a whole, we see continued uncertainty in the short term.
“However, our more positive view on the medium and longer term outlook remains unchanged.”
James Hardie was also continuing an expansion of its manufacturing capacity across the US and Asia Pacific.
Sales in Australia, New Zealand and the Philippines rose in the December quarter and are expected to continue to grow in line with the strengthening housing market. OptionsXpress market analyst Ben Le Brun said the market had welcomed the company’s upbeat outlook for the US housing recovery had likely lifted its shares.
“Third quarter is seasonally very, very strong for James Hardie so this number should have been quite strong in terms of sales and profits and I think that’s exactly what the market got,” Mr Le Brun said.
“They’re positive on the US housing market into the future and they still think the product they’re offering is going to see plenty of demand out of the US.”
James Hardie’s quarterly net profit, which includes the volatile impact of asbestos liabilities, was down eight per cent from a year ago to $US263 million ($A337.7 million).