This article is from the Australian Property Journal archive
BUILDING materials supplier James Hardie, a $1.9 billion company, has delivered a net operating profit of $1.4 million for the first quarter of 2009 – 96% lower when compared to $39.1 million in the previous corresponding period.
During the first quarter, net sales decreased 14% to $US365.0 million, gross profit was down 26% to $US124.0 million and EBIT excluding asbestos was 39% lower at $US64.0 million. EBIT including asbestos decreased 69% from $US75.0 million to $US22.9 million.
Results were significantly affected by further declines in the United States housing market, where housing starts fell 35% in the first quarter compared to the same period last year.
US and Europe Fibre Cement net sales fell 20% in the first quarter compared to the same quarter of the prior fiscal year and US and Europe Fibre Cement EBIT for the quarter decreased 42% to $US65.6 million, primarily due to the decreased EBIT performance of the US business.
The US business EBIT decreased due to lower sales volume and higher unit costs, partially offset by a decrease in SG&A spending. The higher unit costs were driven by increased pulp and energy costs and lower fixed cost absorption.
Asia Pacific Fibre Cement net sales were up 17% for the quarter. Asia Pacific EBIT for the quarter increased 27% due to an improved gross margin performance and favourable currency exchange rate movements of the Asia Pacific business’ currencies compared to the US dollar, partially offset by increased SG&A expenses.
Diluted earnings per share for the quarter decreased to US0.3 cents per share from US8.3 cents per share in the same period last year.
In the US, National Association of Home Builders’ chief economist, David Seiders, reports that NAHB’s surveys of home builders “have yet to show stabilisation of either net home sales or sentiment regarding the demand side of the single-family market”.
The NAHB anticipates recovery in housing starts to begin in the second quarter of next year, although both housing starts and residential fixed investment are expected to be down in 2009 on a year-on-year basis.
Looking ahead, chief executive Louis Gries said in Asia Pacific, building approvals are expected to continue to fall in Australia and New Zealand during fiscal year 2009. While there is likely to be some activity in medium density dwellings, renovations and commercial properties, this is not expected to offset the housing market decline.
Housing affordability is expected to remain under pressure with high interest rates and fuel costs and increased building costs. Residential construction in the Philippines is expected to remain flat or decline.
“The company notes the range of analysts’ forecasts for operating profit from continuing operations, excluding asbestos, for the year ending March 31 2009 of between $US97 million and $US130 million. The company is comfortable with the bottom half of this range, but notes there remains significant uncertainty over the outlook for US housing activity,”
He also said changes in the company’s asbestos liability to reflect changes in foreign exchange rates or updates of the actuarial estimate, ASIC proceeding matters, income tax related issues and other matters may have a material impact on the company’s consolidated financial statements.
Australian Property Journal
