James Hardie Industries (JHX) SNAPSHOT
Profile: James Hardie Industries PLC (JHX) is global building materials company headquartered in Ireland. It is listed on both the ASX and NYSE. It produces fibre reinforced cement-based building products as well as fibre gypsum products. Its brands include HardiePlank, HardiePanel, HardieTrim, Fermacell and AESTUVER.
History: JHX was established in 1888 as an import business. It listed on the ASX in 1951. Prior to 1987, JHX manufactured products which contained asbestos. In 2007, it entered into an agreement to provide long-term funding to the Asbestos Injuries Compensation Fund dependant on factors such as JHX’s cashflows and estimates of future claims related to asbestos. In the late 1970s it developed asbestos free fibre cement and in the early 1980s commenced manufacturing a range of asbestos free fibre cement products. Since then, JHX has expanded globally, opening its first fibre cement plant in California in 1990. More recently, JHX completed the acquisition of European-based Fermacell for €516m in April 2018.
Earnings composition: In FY19, the North America Fibre Cement segment reported Earnings Before Interest and Tax (EBIT) of US$388m (79%). The Asia Pacific Fibre Cement segment reported US$100m (20%), while Europe Building Products and other businesses reported US$10m (2%) and -US$7m (-1%) respectively.
Most recent result – FY19: Group EBIT increased 2% on the prior corresponding period (pcp) to US$405m. The Europe Building Products segment reported US$10m EBIT, up from US$0.3m in the pcp, following the Fermacell acquisition. This improvement was largely offset by weakness in the Asia Pacific Fibre Cement segment, with EBIT declining 8% on the pcp to US$100m due to negative exchange rate impacts. NA Fibre Cement EBIT increased a modest 2% on the pcp to US$388m. Group NPAT increased 3% on the pcp to US$301m. A US$0.26 dividend was declared, bringing total dividends in FY19 to US$0.36, down from $0.40 in the pcp.
Company outlook: JHX expects FY20 operating profit of between US$325m and US$365m. It expects modest growth in the US housing market in FY20 with c.1.2-1.3m new construction starts. The company expects the Europe Building Products segment to achieve year on year net sales and EBIT margin growth. The Australian addressable market is expected to experience a high single-digit contraction, with JHX net sales expected to grow above market levels.
Important dates: 2H20 results are scheduled for 7 November 2019.
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