James Hardie Experiences a Slow Down

Submitted by Craig Strzelecki on 23 May, 2008 - 09:42

James Hardie Industries reported net 20% fall in its earnings for its full year operations. It also foresees a further slump owing to weak US housing market. Its operating profits excluding asbestos payments and tax adjustments fell 61 percent to $20.1 million in three months to March 31 compared to same period last year. The company’s market value fell to A$2.4 billion after the shares tumbled 7.5%. It reported net results which showed a loss of US$71.6 million.

James Hardie industries reported a worse than expected results in the fourth quarter and expects that it may take another year before the US housing industry shows any positive signs of recovery. According to the Chief Executive of James Hardie Industries, Louis Gries, the market shall not get better soon and it would be even tougher to fight in future.

US Housing market accounts for nearly four-fifth of James Hardie’s sales. However, US housing starts had fallen nearly 55 percent on their peak levels of 2006. The usual pick up activity during US spring has so far failed to materialise.

James Hardie also shocked to its investors by admitting that increasing market share of its fibre cement product business has also stalled. It further went on to admit that it shall be closing its pipe operations as well as the unit has not made any profits since past few years.

Mr Gries denied closure of its Australian business as it was performing well and has been its main driver of Asia-Pacific business. The company, however, sees a flat outlook for activity in the Australian residential construction market in the short term. It also expected New Zealand market to be weaker this year.

When the Australian share market closed at the previous day trading, James Hardie shares fell 7.46 percent to $5.58 which was its lowest since March 17. The share price for the company has slumped 37 percent in past 12 months. The group net sales fell 5% to A$1.53 billion. The company declared a dividend of US 8c for a total of US 20 c for a year.

Download our FREE App


Signup for Free
Don't miss out on your free share trading articles.


Free Risk Money Management Calculator for those who sign up!