Tax exile, James Hardie (JHX) has benefitted from stronger demand for home building materials in the US, Europe and Australia, as well as the stronger US dollar to post a sharp rise in annual profit which in turn produced a higher annual dividend, special dividend and buyback.
So it’s no wonder the shares jumped by 12% at one stage yesterday to more than $17 and closed 11.6% stronger at $16.99. Net profit rose 12% to US$221.4 million from US$197.2 million a year earlier.
Management said its US and European businesses delivered “significant profit growth” and more of the same was expected in the coming year, although at a more moderate level of growth.
The construction materials maker said significant earnings growth was achieved in its main businesses due to higher sales and margins, and that is expected to continue.
Sales in Australia are also expected to grow, in line with increasing housing construction and renovation activity.
JHX 5Y – James Hardie rides US recovery
The company’s net profit in the year to March 31 compares to $US99.5 million in the previous year.
James Hardie will reward shareholders with a special dividend of 22 USc, as well a final dividend of 27 USc, and a total for the year of 35 USc after the 8 USc a share interim.
The 35 USc a share in payments was down on the 40c paid out in 2013-14 which included two special dividends, one of which was paid to mark the company’s 125th year.
The buyback will see up to 5% (or 22.284 million shares) bought back at market prices over the next year – at a potential cost approaching $400 million, depending on the price of the shares.
The building products group said fourth-quarter net profit jumped 26% on the same period last year to $US57.3 million, while fourth quarter earnings before interest and tax increased 41% to $US80.8 million as margins rose.
Group revenue for the full-year rose 11% to $US1.66 billion, with $US1.13 billion derived from US and Europe and $US366.2 million from in Australia and Asia Pacific.
James Hardie said it expects "moderate growth in the US housing market in fiscal 2016". The company is planning to meet demand based on US housing starts of 1.1 million to 1.2 million during the year.
Sales in Australia are expected to grow thanks to an uptick in detached home building and renovations.
CEO Louis Gries said in the statement the company’s US and European operations delivered significant earnings growth during the 2014-15 year.
"Net sales, volume, price and EBIT margin all grew compared to prior corresponding periods. This performance was driven by strong primary demand growth and the continued focus across our plants on cost management and operational excellence," he said.
"As we look to the future, we continue to expect EBIT of our US and European segments to grow and EBIT margins to stay in our target range as the US housing market recovers and we increase housing market penetration."
