Dividend back on table
Building supplies business James Hardie signals confidence in strategy
BUILDING materials supplier James Hardie says its plan to ride out the pandemic has worked, allowing it to reinstate cash returns to shareholders.
The fibre cement and fibre gypsum building product manufacturer, which moved from the Netherlands to Ireland in 2010 chasing tax minimisation, reported a 22 per cent lift in net profit for the September quarter to $US120.5M ($165.5m).
That came after a 12 per cent increase in net sales to a record $US736.8M ($1.01bn).
“The result was boosted by a strong improvement in demand across all markets, and a reduced operating cost base,” investment bank Citi observed yesterday.
It is in line with James Hardie’s upgraded guidance provided last month and the company has reaffirmed its full year net profit forecast of up to $US420M ($577m).
That’s despite the continuing uncertainties of the COVID-19 health crisis on the new construction, and repair and remodelling markets in North America, Asia Pacific and Europe where it operates.
“We continue to successfully navigate through this complex global pandemic, executing effectively on our strategic actions that were implemented at the start of the crisis,” chief executive Jack Truong said.
“Our confidence in the global business and its resiliency to various market conditions continues to evolve.
“I am pleased to announce today that the changes that we have made to improve our financial results and cash performance put us in a position to further strengthen our balance sheet and resume returning capital to our shareholders.”
No interim dividend was declared following the suspension of dividends in May but the company now says it will be able to reinstate an annual ordinary dividend for 2020-21.
Dr Truong said the company expected to continue to invest in new product development and capacity expansion “supported by aggressive marketing and brand building efforts as we seek to gain incremental share in all key markets in the coming years”.
Citi said negatives in the report were higher freight costs. Demand remains strong but margins are expected to shrink from current levels due to costs. RBC Capital Markets and Ord Minnett said the result was mostly in line with expectations, with better-thanexpected results in Asia Pacific countered by disappointing North America figures.