James Hardie Industries [ASX:JHX] revealed today that things haven’t been travelling so well in business, with challenging market conditions infiltrating the company’s abilities to earn and make profit.
The sentiment came in the group’s third quarter results for fiscal 2023, released to the market earlier today.
Adjusted net income declined 16% to US$129.2 million for the third quarter, global net sales dropped 4%, and the building products manufacturer has had to cut its profit guidance for the financial year.
James Hardie’s shares plummeted more than 7% after the announcement, taking its full-year value down 37%. Despite being an industry leader in trade, its lagging 38% share wise:
www.TradingView.com
James Hardie’s third quarter revelations
The group highlighted the following key metrics for the quarter ending 31 December 2022:
- Global net sales declined 4% as global volumes declined 11%, said to have been partially offset by pricing and mix growth in all three regions.
- Global adjusted EBIT (earnings before interest and tax) decreased 19% to US$165.4 million, with an adjusted EBIT margin of 19.2%.
- North American fibre cement sales remained flat at US$645.4 million and EBIT declined 5% to US$174.1 million, with an EBIT margin of 27.0%.
- Asia Pacific fibre cement sales decreased 13% to AU$171.2 million and EBIT decreased 21% to AU$42.3 million, with an EBIT margin of 24.7%.
- Europe’s building products sales increased 4% to €101.2 million and EBIT decreased 86% to €1.5 million, with an EBIT margin of 1.5%.
The company reported significant competition and challenges brought on by a market downturn.
The group’s CEO, Aaron Erter, hopes to manage through a strong execution strategy, focused on driving profitable volume share gain, balancing its manufacturing network, and optimising on the current market environment while still investing in profitable growth.
Mr Erter commented:
‘Our team executed in the face of significant challenges to deliver strong financial results in fiscal year 2023. The team’s success in driving high value product growth is underpinned by our superior value proposition. We are homeowner focused, customer and contractor driven, providing the entire value chain with world class products and services.’
JHX outlook and guidance
JHX said its lower-than-expected volume results in North America and APAC, along with restructuring charges in the second half, means management will lower the 2023 fiscal year adjusted income guidance range to US$600 million–$620 million.
Previously, the range was between US$650 million and US$710 million, after the company reflected on comparable prior year earnings of US$620.7 million (in FY22).
‘James Hardie’s guidance is based on current estimates and assumptions and is subject to several known and unknown uncertainties and risks,’ the company stated.
JHX has switched to a share buyback scheme rather than dividends in returning excess capital to shareholders. As it’s focused on investing in its growth as the number one priority, this is the company’s best option to ensure investment in organic growth while maintaining financial strength and flexibility through economic cycles.
Australia’s next commodity boom is nearly here
Building products are important for the nation’s infrastructure, but there’s something else being built that’s getting more attention as of late: the world’s emission-free future and the vehicles that can get us there.
Our resources expert and geologist, James Cooper, thinks the Australian resources sector is set soon set to boom.
The scramble to get the world to a heathier, net-zero place has also brought on the ‘Age of Scarcity’.
James is convinced ‘the gears are in motion for another multi-year boom in commodities’… a boom where Australia and its stocks stand to benefit.
The next big mining boom is predicted to happen in the next few years. The question is, are you ready for it?
You can access a recent report by James on exactly that topic, AND an exclusive video on his personalised ‘attack plan’ right here.
If that isn’t enough to sate your curiosity, you can also check out this recent interview with James and Greg at ausbiz.
Regards,
Mahlia Stewart
For The Daily Reckoning
