Building materials group James Hardie has reported its worst numbers to date, as net profit plummeted 99 per cent for the first quarter.
The company made a mere US$1 million for the three months to June 30, down from $104.9 million. James Hardie blames the weak figures on ASIC expenses, US$38.2 million worth of asbestos liabilities, tax adjustments, a weak US housing marketing and an increasingly escalating Australian dollar.
James Hardie CEO Louis Gries said, “In the US, new housing and repair sectors remained weak, with high unemployment, low levels of consumer confidence, falling house values, excess housing inventory and limited credit availability, are all still inhibiting growth.” He noted that there is no evidence of a sustainable recovery in the US construction market.
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Despite the bad news, James Hardie said it expects a full year net operating profit, excluding the asbestos, court and tax-related adjustments, in the range of $US126 million and $US140 million. These numbers are highly dependent upon improved housing conditions and a more stable exchange rate between the US dollar and Australian dollar.
The building materials group also noted that conditions in the Asia Pacific region are not much better. “In Australia the operating environment has now also deteriorated and industry data indicates that both new housing and repair and remodel markets will be weaker in the current financial year,” Louis Gries said.
The new housing sector in New Zealand also remained at historically low levels, he said. Increasing pulp prices have also added to James Hardie’s financial woes.