James Hardie cuts full-year earnings forecast due to inflation

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Aug 16 (Reuters) – James Hardie (JHX.AX) cut its annual profit guidance on Tuesday, marking a dramatic change in stance at the world’s leading fiber cement maker as rising operating costs and a cooling real estate market hurt margins at all three operations regions.

After raising its earnings forecasts four times last year on the back of a strong North American housing market, the Australian building materials giant is now facing mounting inflationary pressures. Continue reading

“The current macroeconomic environment not only creates uncertainty for the housing markets in all three regions in which we operate, but also puts pressure on our financial results for fiscal year 2023,” said Chief Financial Officer Jason Miele.

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The Dublin-based company pointed to higher production and distribution costs, with pressures in freight, pulp, natural gas, labor and cement.

The company now expects fiscal 2023 adjusted net income to be between $730 million and $780 million, up from its previous guidance of $740 million to $820 million. Continue reading

The company’s Australian shares fell 3% before reversing course and trading 2.6% higher, while the broader market (.AXJO) rose 0.4%.

New home sales in the United States, which account for 70% of James Hardie’s revenue, declined for two months of the quarter as higher mortgage rates and record home prices reduced affordability in the company’s largest market. Continue reading

James Hardie said it also reduced its planned capital expansion investments by 29% for fiscal 2023.

“Although guidance has reduced…we still believe JHX has the right strategy and ability to leverage price to drive margin recovery through FY23,” analysts at brokerage UBS said in a note.

Net sales increased 19% year over year to $1 billion, with the North America segment contributing $740.1 million.

The company announced last week that it would appoint a new chief executive officer in the next 30 days after former boss Jack Truong was fired in January over concerns about his behavior and leadership style. Truong has denied the claims.

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Reporting by Riya Sharma in Bengaluru; Edited by Shailesh Kuber and Subhranshu Sahu

Our standards: The Thomson Reuters Trust Principles.

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