James Hardie raises profit guidance, rides US housing boom

Building supplies firm James Hardie has lifted its full-year profit guidance by more than 10pc after record first-quarter earnings.

A building boom in North America has helped lift James Hardie profits.

Building products supplier James Hardie has posted record earnings for the first quarter on the back of a building boom in North America and strong demand for high quality building products, prompting it to lift its full-year guidance by more than 10 per cent.

James Hardie, the world’s biggest producer and marketer of high performance fibre cement and fibre gypsum, revealed a particularly robust performance in the US, complemented by improving sales and earnings across Europe and Australia, as homeowners marketed to via social media and other platforms chose their building products and were prepared to pay higher prices for better quality supplies.

A direct pitch to its customers through social media and influencer campaigns using US TV personalities and influencers such as ‘lifestyle expert’ Kia Malone helped James Hardie deliver profitable organic growth, penetrate growth in existing and new segments and ultimately drive high value product mix in the US.

The direct marketing to homeowners of its building products was a critical strategy for James Hardie and it believes it has helped it accelerate the creation of demand.

It helped generate for James Hardie its ninth consecutive quarter of above market returns as it grabbed market share from competitors.

James Hardie revealed on Tuesday that a building boom and stronger markets across Europe and Australia had pushed James Hardie to raise its fiscal 2022 net profit guidance range to $US550m to $US590m, up from initial guidance of $US520m to $US570m.

The building supplies company is forecasting its US business to grow net full-year sales in 2022 by more than 20 per cent against 2021 with a 7 per cent to 9 per cent rise in pricing mix.

James Hardie said that it had delivered record quarterly net sales growth of 35 per cent to $US843.3 million ($1.146 billion) for the three months to June 30 as adjusted net profit rose 50 per cent to $US134.2m. Earnings before interest and tax rose 45 per cent to $US180.5m for the quarter.

The bumper result and profit upgrade triggered a 5 per cent rally in James Hardie shares, and the stock later closed up $1.39 at $49.32. James Hardie’s stock is up 53 per cent over the last 12 months.

James Hardie chief executive Jack Truong.

Macquarie Research, which has an ‘outperform’ recommendation on the stock applauded the first quarter performance.

“Another solid result, with the value-oriented strategy clearly at work in spades. In the context of a strong market backdrop, James Hardie continues to execute well.”

James Hardie said for its flagship North America fibre cement business, net sales rose 28 per cent to US$577.1m in the first quarter and adjusted EBIT increased 29 per cent to US$169.3m. Europe building products net sales increased 37 per cent to €103.3m ($A165m) and adjusted EBIT increased 575 per cent to €13.5m.

Asia Pacific fibre cement net sales increased 33 per cent to $184.1m and adjusted EBIT increased 50 per cent to $50.4m.

“We are making good progress on our stated global strategy,” said James Hardie chief executive Jack Truong.

“Globally, we continue to enable our customers to make more money by selling more James Hardie products. Our high value product mix provides homeowners with products that combine long lasting beauty and endless design possibilities, with trusted protection and low maintenance.”

Dr Truong said he was pleased that the first quarter marked its ninth consecutive quarter of delivering growth above market and strong returns.

“In our investor day at the end of May, we described our three critical initiatives for fiscal year 2022 through fiscal year 2024: market directly to homeowners to accelerate demand creation, penetrate and drive profitable growth in existing and new segments and commercialise global innovations by expanding into new categories.”

Citi analyst Lisa Huynh said positives of the result included strong profit uplift in North America and improving profitability in Europe, although she rated as a negative higher than expected corporate costs as corporate overheads rose to $33m from $24m.

The profit upgrade and guidance of a profit of $US550m-$US590m for the full year was against Citi’s target of around $US577m and consensus estimates of US$571m, reflecting the better than expected profit was already built into market valuations.

Originally published as James Hardie raises profit guidance, rides US housing boom