James Hardie Industries SE manufactures building products, including fiber cement siding, backerboard, and pipe. The company has significant operations in the US, but is listed on the Australian Stock Exchange.

 

James Hardie has reported a US$140.4 million full year operating profit, a 20% rise on year. The result was slightly ahead of analyst expectations of US$137.7 million.

Sales for the full year rose by 6% to US$1.24 billion.

CEO Louis Gries described operating earnings for the full year as solid with revenue up in Europe and the U.S. but with some rises in some costs constraining profitability.

The company declared a final dividend of US$0.38 a share.

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James Hardie Industries (ASX:JHX) is a leading international building materials group that produces a wide range of fibre cement building materials used in the exterior and interior of residential and commercial buildings.

The company is also the largest seller of home siding (imitation wood) in the US, and produces fibre cement in the US, Australia, New Zealand and the Philippines.

Approximately 80% of JHX’s sales come from the housing industry, and the majority of this exposure is via the US housing market.

Although the US property crash has been a millstone on JHX, recent evidence suggests the market may have turned the corner.

JHX focus on efficiency and market share gains has placed it in an advantageous position to benefit from increased US housing activity.

US housing recovery

Although the US housing sector has been in a well established decline for much of the past five years, recent evidence is pointing to a long-awaited recovery.

Among the relevant housing indicators for James Hardie are housing starts and building permits.

Housing starts measure the number of new monthly building constructions, whilst building permits are more of a leading indicator in that they measure the number of new monthly residential building permits.

Since May 2011, both these indicators have been steadily rising in a sign Americans are beginning to take advantage of the country’s record low interest rates.

Furthermore, we see this momentum continuing due to the slowly strengthening US jobs market and the Federal Reserve’s pledge to maintain low interest rates until the end of 2014.

Operating results

In late November, JHX reported a 1Q12 net operating profit of US$41.2 million, which was double its result in 1Q11.

Despite reporting low demand, James Hardie was able to achieve its profit on the back of operational improvements such as a reduction in fixed costs, as well as an increased share of the fibre cement market.

This increased market share, positions JHX well in the event of an acceleration of the US housing recovery.

Outlook

JHX forecast FY12 net operating profit of US$126 – US$140 million.  Although management was cautious about the outlook for US housing, recent data points to a noticeable pickup in this industry.

With US employment inching higher, housing affordability high and the Fed committed to a record low interest rate environment, there are enough incentives to drive continued improvement in residential construction activity.

We at the Australian Stock Report believe that a focus on cost control and increasing market share has placed JHX in a strong position to leverage off any US housing recovery.

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James Hardie (JHX) is a leading international building materials group that produces a wide range of fibre cement building materials used in the exterior and interior of residential and commercial buildings.

The company is also the largest seller of home siding (imitation wood) in the US, and produces fibre cement in the US, Australia, New Zealand and the Philippines.

On 17 May, JHX announced a 5% share buyback, and will resume dividend payments following its second quarter results in November.

An interim dividend will be paid after the second quarter results, whilst a further dividend will be paid following its full year results in May 2012.

The buyback will be conducted on-market during the next 12 months, and is designed to optimise JHX’s capital structure.

JHX also reported that its net debt fell to an unaudited US$40.4 million by March 31, down from US$134.8 million a year earlier.

James Hardie was one of the market’s hot shares ahead of the buyback announcement.

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James Hardie (JHX) is a leading international building materials group that produces a wide range of fibre cement building materials used in the exterior and interior of residential and commercial buildings.

The company is also the largest seller of home siding (imitation wood) in the US, and produces fibre cement in the US, Australia, New Zealand and the Philippines.

JHX and its sector peers have been one of the shares to sell in recent times, as the housing market at home and more so abroad has really struggled.

JHX’s US exposure thus caused the company headaches during these difficult times – JHX normally makes 75% of its earnings in the US.

On Friday, JHX reported a net loss of US$345.2 million in the nine months ending 31 December, 2010.  This compares to a US$82.6 million loss a year earlier.

For the quarter, JHX posted a loss of US$26.4 million, which compares to a US$14.9 million profit in 3Q10.  The result was impacted by significant asbestos related losses related to the stronger Australian dollar.

JHX said there is no evidence of housing sector recovery in the US, and it downgraded its full year guidance from the lower end of US110 – US$125 million to between US$105– US$115 million.

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Australian Market Watch – James Hardie (JHX) 27 May 2010

Australian stock James Hardie (JHX) is an international building materials company and is a manufacturer of fibre cement products. It operates in the US, Australia, New Zealand and Philippines.

JHX has reported a FY10 net loss of $84.9 million, down from last year’s US$136.3 million profit, and well below analyst estimates of a US$127.7 million profit.

The result was weighed down by JHX’s ongoing asbestos claims, which increased US$224.2 million during the year, and a 6% drop in net sales that was attributable to a weak US housing market.

JHX maintained a cautious outlook, sighting the sluggish US housing market, constrained credit conditions, and a weak employment market as the key threats to earnings.

JHX did not declare a final dividend.

Australian share price for JHX last closed at $7.11, weakening since the middle of May.

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