James Hardie Announces Adjusted Net Operating Profit of US$61.7 Million for Fiscal Year 2018 First Quarter
August 07 2017 - 9:18PM
Business Wire
James Hardie today announced results for the quarter ended 30
June 2017:
- Group Adjusted net operating profit of
US$61.7 million for the quarter, a decrease of 7% compared to the
prior corresponding period (“pcp”);
- Group Adjusted EBIT of US$88.3 million,
a decrease of 10% compared to pcp;
- Group net sales of US$507.7 million, an
increase of 6% compared to pcp;
- North America Fiber Cement Segment
volume increased 2% compared to pcp;
- North America Fiber Cement Segment net
sales of US$393.1 million, an increase of 6% compared to pcp;
- North America Fiber Cement Segment EBIT
margin of 20.3%;
- International Fiber Cement Segment EBIT
margin of 23.6%; and
- Made a payment of US$102.2 million to
AICF on 3 July 2017.
CEO Commentary
James Hardie CEO Louis Gries said, “Our North America Fiber
Cement Segment results reflect top line growth of 6% including
volume growth below our market index. Additionally, manufacturing
inefficiencies and production costs led to a decrease in EBIT
margin of 5.2 percentage points compared to the prior corresponding
period."
He continued, “The capacity constraints which arose in the prior
fiscal year dampened our demand, despite our capacity increasing
compared to the prior corresponding period and the prior quarter.
Additionally, even though our manufacturing inefficiencies and
production costs remain higher than our historic and prior
corresponding period levels, they have begun to stabilize. Our
focus this year will be on increasing our manufacturing capacity to
drive a higher, longer term, return on capital and improving the
performance of our North America manufacturing network.”
He added, “Within our International Fiber Cement business, net
sales increased 8% due to volume increases in our Asia Pacific
markets; and, EBIT increased 10%, driven by the strong performance
of our Australian and New Zealand businesses.”
Mr. Gries concluded, “Our group results for the first quarter
reflected marginal top line growth, as well as EBIT margin and
Adjusted NOPAT that were below our expectations. However, we expect
performance in North America to improve throughout fiscal year
2018. Finally, on 3 July 2017, we made a payment of US$102.2
million to AICF, representing 35% of our free cash flow, as defined
in the AFFA, for fiscal year 2017.”
Outlook
We expect to see steady growth in the US housing market in
fiscal year 2018. The single family new construction market and
repair and remodel market are expected to grow similar to the
year-on-year growth experienced in fiscal year 2017. The Company
expects new construction starts between approximately 1.2 and 1.3
million.
We expect our North America Fiber Cement segment EBIT margin to
be in our stated target range of 20% to 25% for fiscal year 2018.
This expectation is based upon the Company continuing to drive
improved operating performance in its plants, stable exchange rates
and input cost trends.
Net sales from the Australian business are expected to trend in
line with the average growth of the domestic repair and remodel and
single family detached housing markets in the eastern states of
Australia. Similarly, growth in the New Zealand business is
expected into fiscal year 2018.
Full Year Earnings Guidance
Management notes the range of analysts’ forecasts for net
operating profit excluding asbestos for the year ending 31 March
2018 is between US$248 million and US$297 million. Management
expects full year Adjusted net operating profit to be between
US$240 million and US$280 million assuming, among other things,
housing conditions in the United States continue to improve in line
with our assumed forecast of new construction starts, input prices
remain consistent and an average USD/AUD exchange rate that is at,
or near current levels for the remainder of the year. Management
cautions that although US housing activity has been improving,
market conditions remain somewhat uncertain and some input costs
remain volatile.
The comparable Adjusted net operating profit for fiscal year
2017 was US$248.6 million. The Company is unable to forecast the
comparable US GAAP financial measure due to uncertainty regarding
the impact of actuarial estimates on asbestos-related assets and
liabilities in future periods.
Further Information
Readers are referred to the Company’s Condensed Consolidated
Financial Statements and Management’s Analysis of Results for the
three months ended 30 June 2017 for additional information
regarding the Company’s results, including information regarding
income taxes, the asbestos liability and contingent
liabilities.
Use of Non-GAAP Financial Information; Australian Equivalent
Terminology
This Media Release includes financial measures that are not
considered a measure of financial performance under generally
accepted accounting principles in the United States (GAAP), such as
Adjusted net operating profit and Adjusted EBIT. These non-GAAP
financial measures should not be considered to be more meaningful
than the equivalent GAAP measure. Management has included such
measures to provide investors with an alternative method for
assessing its operating results in a manner that is focused on the
performance of its ongoing operations and excludes the impact of
certain legacy items, such as asbestos adjustments. Additionally,
management uses such non-GAAP financial measures for the same
purposes. However, these non-GAAP financial measures are not
prepared in accordance with US GAAP, may not be reported by all of
the Company’s competitors and may not be directly comparable to
similarly titled measures of the Company’s competitors due to
potential differences in the exact method of calculation. For
additional information regarding the non-GAAP financial measures
presented in this Media Release, including a reconciliation of each
non-GAAP financial measure to the equivalent US GAAP measure, see
the section titled “Non-US GAAP Financial Measures” included in the
Company’s Management’s Analysis of Results for the first quarter
ended 30 June 2017.
In addition, this Media Release includes financial measures and
descriptions that are considered to not be in accordance with US
GAAP, but which are consistent with financial measures reported by
Australian companies, such as operating profit, EBIT and EBIT
margin. Since the Company prepares its Consolidated Financial
Statements in accordance with US GAAP, the Company provides
investors with a table and definitions presenting cross-references
between each US GAAP financial measure used in the Company’s
Consolidated Financial Statements to the equivalent non-US GAAP
financial measure used in this press release. See the sections
titled “Non-US GAAP Financial Measures” included in the Company’s
Management’s Analysis of Results for the first quarter ended 30
June 2017.
Forward-Looking Statements
This Media Release contains forward-looking statements and
information that are necessarily subject to risks, uncertainties
and assumptions. Many factors could cause the actual results,
performance or achievements of James Hardie to be materially
different from those expressed or implied in this release,
including, among others, the risks and uncertainties set forth in
Section 3 “Risk Factors” in James Hardie’s Annual Report on
Form 20-F for the year ended 31 March 2017; changes in general
economic, political, governmental and business conditions globally
and in the countries in which James Hardie does business; changes
in interest rates, changes in inflation rates; changes in exchange
rates; the level of construction generally; changes in cement
demand and prices; changes in raw material and energy prices;
changes in business strategy and various other factors. Should one
or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described herein. James Hardie assumes no
obligation to update or correct the information contained in this
Media Release except as required by law.
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version on businesswire.com: http://www.businesswire.com/news/home/20170807006115/en/
James HardieJason Miele, +61 2 8845 3352Vice President, Investor
and Media Relationsmedia@jameshardie.com.au
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