James Hardie shares have soared to an all-time high after the building products group improved its profit guidance and lifted earnings in its key US market.
The company on Friday booked a nine per cent drop in third-quarter profit after it paid down debt and recorded an increase in income tax expense.
However shares rose $1.50, or 6.8 per cent, to an all-time high of $23.65 on Friday as investors embraced James Hardie’s revised full-year operating profit forecast of $260 million to $275 million – a narrowing of the $245 million to $275 million range given in September.
The company also achieved an earnings margin of 26.9 per cent for its US fibre cement business in the December quarter, up from 24.5 per cent in the September quarter, as it cut operating expenses.
James Hardie said net operating profit for the three months to December 31 was $US79.9 million ($A111.9 million), down from $US87.9 million a year ago.
Net sales for the three months to December 31 grew nine per cent to $US495.1 million driven by a higher average net sale price in its North America fibre cement segment and higher sales volumes in the international fibre cement division.
Chief executive Louis Gries said the company’s North America fibre cement division grew seven per cent in the quarter, primarily due to higher net prices and modest volume growth.
“The capacity constraints which arose in the prior fiscal year dampened our demand in fiscal year 2018, despite our capacity increasing compared to the prior corresponding periods,” Mr Gries said.
“We are on track to increase manufacturing capacity, improve the performance of our North America manufacturing network and drive improved primary demand growth.”
Mr Gries said the international fiber cement division grew 15 per cent in the quarter on the back of strong volume growth in its Asia Pacific business.
The company’s earnings before interest and tax also rose by 32 per cent to $US143.9 million, compared to $US108.7 million a year ago.
James Hardie expects steady growth in the US housing market over the full year and said the single family new home construction market and repair and remodel market will grow similarly to the year-on-year growth experienced in the past financial year.
It forecast new construction starts between about 1.2 and 1.3 million.