James Hardie slips despite rising profits as building booms

The cement maker is growing and has set demanding goals but investors wanted even more.

James Hardie gave a rosy outlook for fiscal year 2022.

Fibre cement maker James Hardie Industries is riding the recovery of the US economy and turned in a strong full year and picked up market share.

The company is benefiting from a surprisingly strong post-coronavirus crisis housing market, which has been spurred by low interest rates and government stimulus packages to encourage new building globally.

James Hardie’s full year profit was up by 9 per cent to $US262.8m ($337.2m) and its adjusted net income leapt by 30 per cent to $US458m, as its divisions fired.

But investors punished the company with its shares off by 4.5 per cent to $40.20 by the close as the market had expected an even stronger result and guidance.

The company said it was experiencing strong growth momentum in its businesses across the US, Europe and the Asia-Pacific with residential and market growth in the US expected to continue.

James Hardie gave a rosy outlook for fiscal year 2022 saying it expects adjusted net income to be between $US520m and $US570m.

In addition to fiscal year 2022 adjusted net income guidance, it provided long-term targets for annual adjusted earnings margins in each operating segment, saying in North America they should run at 25-30 per cent, in the Asia Pacific at 25-30 per cent and in Europe 11-16 per cent.

James Hardie chief executive Jack Truong said the company had delivered eight consecutive quarters of consistent profitable growth, including record financial results each of the past three quarters

He said the company had accelerated its strategy to unlock capacity and increase efficiency in its global manufacturing network, better integrated its supply chain with its customers, which drove market share gains.

The North America fibre cement segment net sales increased by 17 per cent to $US555.3m and adjusted earnings before interest tax increased by 27 per cent to $US152.9m in US dollars, with adjusted earning margin expansion of 220 basis points to 27.5 per cent.

The Europe building products segment net sales increased by 12 per cent to €104.6m and earnings increased to €15.7m in Euros, with a record earnings margin of 15 per cent.

In the Asia Pacific the fibre cement segment net sales increased by 11 per cent to $162.6m and adjusted earnings increased by 46 per cent to $43.7m, with earnings margin expansion of 630 basis points to 26.8 per cent.

The group adjusted earnings before interest and tax margin expanded by 340 basis points to 21.4 per cent. It had a 74 per cent increase in our operating cash flow to $US786.9m

Dr Truong flagged an expanded focus for fiscal year 2022 and hopes to commercialise global product innovation, further penetrate into existing and new market opportunities, and extend the James Hardie brand from a premium professional brand into a market-leading consumer brand.

“This market-driven innovation represents a cornerstone of our organic growth potential in the coming years. In April, we began to roll out a global marketing campaign to create demand directly with homeowners to position James Hardie as the trusted brand of premium quality products that provide endless design possibilities,” he said.

He said James Hardie had a growing, global network of plants where new processes were reducing variation, increasing efficiency and improving quality.