Source: TheAustralian
SHARES in US-focused building materials specialist James Hardie jumped by more than 15 per cent yesterday when the group revealed it had more than doubled its first-half net profit.
The company, which has seen several false starts in the past
few years in the US housing recovery, reported a net profit of $US194 million ($208.52m) in the six months to September 30, compared with $US84m in the same period last year.
The company is listed in Australia, domiciled in Ireland and earns most revenue from its pressed cement manufacturing operations in several US states.
The shares initially ran up to an all-time high of $12.07 before easing slightly to close at $12, up $1.56 or 15 per cent.
The reported profit number included the company's asbestos compensation liabilities, expenses relating to regulator the Australian Securities & Investments Commission, New Zealand product liability expenses and tax adjustments.
The company's asbestos liabilities were adjusted downwards by $US90.4 million ($97.17m) because of the 11 per cent depreciation in the value of the Australian dollar against the US dollar between the start of the June quarter and the end of the September quarter. Most recipients of compensation are paid in Australian dollars.
Chief financial officer Russell Chenu said the asbestos fund had paid $72.8m of claims during the half year, and the number of claims were above expectations.
"We have seen some concerning trends in mesothelioma claims," he told analysts.
"We don't fully understand exactly the causes of the increases in claims as of yet."
Payments into the asbestos fund are dependent on free cashflow and much of the profit increase was attributed to a 25 per cent lift in sales revenue in the US and Europe during the second quarter of the current financial year, which saw earnings before interest and tax for those operations jump in the second quarter by 53 per cent to $US67.3m on a volume increase of 21 per cent.
The Asia-Pacific business also increased sales, but the stronger US dollar muted earnings growth.
Chief executive Louis Gries said the company previously had "invested significantly in organisational capability in expectation of market growth in the US" and the company was benefiting from that investment.
He said construction of new homes in Australia had improved, but was still weaker than the company would like.
"Detached homes, where we make most of our money, is up but not up near as much as medium density," he told analysts.
The company's net operating profit in the six months to September, which excludes items such as asbestos and legal liabilities, was $US108m ($116.09m), up from $US83m in the previous corresponding period.
It will pay an interim dividend of 8c a share.
0 comments:
Post a Comment