James Hardie is looking for moderate growth in the key US housing market this financial year after the building products group saw its adjusted operating profit rise 10% to $US242.9 million ($335 million).
But that net profit in the year to March 31 fell 16% to $US244.4 million ($337.3 million) from the year-earlier $US291.3 million. Full-year operating profit was impacted by higher income taxes, higher interest expense and unfavourable changes in Hardies’ asbestos liability.
The group declared a final dividend of US29c, US2c above the corresponding dividend in 2015, although shareholders were also treated to a special dividend of US22c last year. With the 9 cents a share interim, total payout for the year is 38 cents a share. Hardie also announced a new 12-month buyback program to acquire up to $US100 million of its shares until May 2017.
That rather than the outlook grabbed the market’s attention and the shares jumped 7% at one stage before closing at $20.18, up 6.5% for the day. It was a record closing high for the stock.
The company, which makes fibre cement building products such as trim and siding, said its fourth-quarter sales rose 6% to $US435.8 million, while full-year sales climbed 4% to $US1.7 billion.
Chief executive Louis Gries said that the stronger result was underpinned by higher sales volumes.
"Our North America and Europe segment continues to provide strong financial results," he said.
"The Asia Pacific Fibre Cement business delivered a good year with higher volume, an increase in average net sales price, and the start up of the new manufacturing facility at Carole Park."
The company has warned previously that last year’s standout numbers would not be topped this year, with the result falling in line with the $US240 million to $US250 million result it forecast in February.
Lower sales prices in the key North American and European segment were crucial to the weaker earnings in the fourth quarter, while the stronger US dollar, rising costs and a significant jump in its tax bill helped cut the full-year profit.
“Our North America and Europe segment continues to provide strong financial results. For the quarter and full year, net sales in North America and Europe increased 10 per cent and 9 per cent, respectively, driven primarily by higher volumes,” James Hardie CEO Louis Gries said in yesterday’s statement.
The company said the coming year would likely deliver modest growth in its key markets.
“The company expects to see moderate growth in the US housing market in fiscal year 2017, based on a forecast for new construction in the US of between 1.2 and 1.3 million starts,” Mr Gries said.
“Net sales from the Australian business are expected to trend ahead of the average growth of the domestic repair and remodel and single detached housing markets in the eastern states of Australia, in fiscal year 2017 with total detached starts expected to range from 100,000 to 110,000 in calendar 2016.”
Similarly, the New Zealand business is expected to deliver improved results supported by a growth in residential markets in the North Island. The Philippines business has experienced growth over the past year, which is expected to continue into fiscal year 2017.
"The Company expects the North America and Europe Fiber Cement Segment EBIT to grow and EBIT margins to remain at the high end of the target range of 20% to 25% for fiscal year 2017. This expectation is based upon the Company continuing to achieve strong operating performance in its plants, consistent with recent quarters, and stable exchange rates and input cost trends,“ directors said in yesterday’s statement.
