James Hardie says housing market remains `uncertain’ despite notching up a record quarter

Global construction materials giant James Hardie Industries says housing markets remain uncertain after it notched up a record result for the last three months of 2023.

Global construction materials giant James Hardie Industries says it may have to continue to negotiate through an uncertain housing market despite announcing a record result for the last three months of 2023.

Of particular concern was it largest market, North America.

“The outlook for the housing markets we participate in globally continues to remain uncertain” the company said.

“In our largest market, North America, the external data providers we utilize expect our addressable market to be between a decrease of 4 per cent and growth of 6 per cent in calendar year 2024 versus calendar year 2023.”

On Tuesday James Hardie said its adjusted third quarter net income jumped 39 per cent to a record $US179.9m ($275.54m) but fourth quarter guidance is for net income to be in the lower range of $US165m to $US185m.

James Hardie chief executive Aaron Erter said they were focused on investing in long-term growth and driving profitable share gain.

“This focus has enabled us to deliver a strong nine months, and a record quarterly result for adjusted net income,” he said.

“Our last four quarterly results have demonstrated that we are accelerating through this

cycle and taking share. Our team is focused on maintaining this momentum and consistency to deliver strong financial results again in the fourth quarter.”

James Hardie recorded an adjusted third quarter net income of $US179.9m ($275.54m).

James Hardie closed 8.5 per cent lower at $54.19.

A Citi analysts report said it was a “strong overall result” and the third quarter net income performance was 5 per cent ahead of consensus, and towards the top end of the guidance range. However, it said the net income guidance for the fourth quarter was slightly below the $187m forecast by VA consensus.

UBS said the fourth quarter outlook was “below expectations” but they remained optimistic for FY25 and James Hardies’ margin sensitivity remains unchanged.

For the third quarter ending December 31, 2023 James Hardie reported global net sales of US$978.3m, up 14 per cent with an adjusted EBIT margin increase of 4.7 percentage points to 23.9 per cent driven by strong EBIT margin across North America, Asia-Pacific and Europe.

The company had a record nine months operating cash flow of US$749.5m up 73 per cent on the same period 12 months ago.

Global construction materials giant James Hardie Industries has warned it will have to negotiate an uncertain housing market.

North America reported a 13 per cent lift in net sales in the third quarter to December 31, 2024 to US$727m while EBIT increased 37 per cent to a record US$237.8m, supported by a higher average net sales price and lower freight and pulp costs.

The company said it expected North American volumes to be in the range of 750 million to 780 million standard feet in the fourth quarter and North American EBIT margin to be in the range of 30 per cent to 32 per cent

In the Asia Pacific region net sales increased 21 per cent to A$206.3m million supported by average selling price (ASP) growth of 14 per cent and a 6 per cent increase in volumes, with New Zealand volumes performing the strongest.

In Europe net sales increased 8 per cent primarily related to a 18 per cent increase in ASP related to strategic price increases and growth in high value products. Volumes declined 10 per cent, driven by reduced market activity in fibre gypsum.

James Hardie chief financial officer Rachel Wilson said in the third quarter they improved their liquidity position by US$419m.

That included proceeds from the US$300m term loan that was executed in October 2023 and the impact of buying back 2.4 million shares at an average price of US$32.11, for total consideration of approximately US$75m.

“We plan to continue to repurchase shares under our US$250m buyback program,” she said.

“Our capital allocation framework is unchanged. The primary focus of our capital allocation framework is to invest in organic growth.”