James Hardie Lifts Profit as Housing Bounces Back

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Tuesday, August 13th, 2013
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Construction products manufacturer James Hardie has lifted its profits amid improving housing markets in the United States and Australia.

In its latest announcement, the company announced a $US52.0 million net operating profit, excluding asbestos, Australian Securities and Investments Commission (“ASIC”) expenses, New Zealand product liability expenses and tax adjustments, for the quarter ended 30 June 2013 – 19 percent on the prior corresponding one year earlier ($US43.8 million).

The company also confirmed analyst expectations of full year profit excluding asbestos claims of between $US165 million and $US194 million are about right, noting that building starts in the US are up by roughly a quarter compared with the same time last year whilst those in Australia were up five percent.

James Hardie CEO Louis Gries says the latest result reflects higher volumes and prices across most of the company’s markets.

“Our first quarter results reflect improved sales volumes and average net sales prices when compared to the previous corresponding quarter for both our USA and Europe and Asia Pacific Fibre Cement segments” Gries says.

“Operating earnings improved in our US business relative to the prior comparable quarter, and the USA and Europe Fibre Cement segment achieved an EBIT margin of 21.4 percentage points. In addition, the US business’ performance so far during our second quarter indicates that the USA and Europe Fibre Cement segment is tracking to achieve a full year EBIT margin in our target range of 20% to 25% for this fiscal year.”

Gries also says the company completed the purchase of land and buildings at its Carole Park facility in Brisbane and commenced investments to increase production capacity there.

The company is hoping to use its new facility to expand fibre-cement production to capitalise on a national trend toward greater use of composite materials and bulk-up capacity in Queensland, a state in which it has a strong market presence.

The latest announcement comes as a large number of construction and related businesses in Australia prepare to release full-year results in coming weeks.

Builders and the manufacturers of steel, timber and other products that supply them have experienced challenging times of late amid generally low levels of building activity.

As a result of a recent lift in the housing sector, however, fortunes of a number of them may finally be starting to improve.

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