James Hardie today announced results for the quarter ended 30
June 2018:
- The Fermacell acquisition closed on 3
April 2018 and is included in the financial results for the first
quarter of fiscal year 2019;
- Group Adjusted net operating profit of
US$79.9 million for the quarter, an increase of 29% compared to the
prior corresponding period (“pcp”);
- Group Adjusted EBIT of US$107.1 million
for the quarter, an increase of 21% compared to pcp;
- Group net sales of US$651.0 million for
the quarter, an increase of 28% compared to pcp;
- North America Fiber Cement Segment
volume increased 5% for the quarter, compared to pcp;
- North America Fiber Cement Segment net
sales of US$433.8 million for the quarter, an increase of 10%,
compared to pcp;
- North America Fiber Cement Segment EBIT
margin of 24.7% for the quarter;
- Asia Pacific Fiber Cement Segment EBIT
margin of 24.2% for the quarter; and
- Europe Building Products Segment
Adjusted EBIT margin excluding costs associated with the
acquisition of 11.9% for the quarter.
CEO Commentary
James Hardie CEO Louis Gries said, “Our North America Fiber
Cement Segment delivered solid top line growth of 10% for the
quarter. Volume increased 5%, with our interiors business
having only marginal growth and our exteriors business returning to
growth above our addressable market. While we have returned to
growth above our market index in our exteriors business, increased
traction will be required to hit our FY19 targeted range."
He continued, “Within our Asia Pacific Fiber Cement Segment, net
sales increased 15% for the quarter, primarily due to the strong
growth in our Australian business. Furthermore, EBIT increased 7%
for the quarter, driven by the strong performance of our Australian
business, partially offset by the performance of our New Zealand
business.”
He added, “We closed our acquisition of Fermacell to start the
quarter on 3 April 2018, and the new Europe Building Products
Segment delivered strong net sales compared to the prior
corresponding period, and an Adjusted EBIT margin excluding costs
associated with the acquisition of 11.9%. We are encouraged by
the early indicators from our European team."
Mr. Gries concluded, “Our group results reflect robust Adjusted
EBIT growth for the quarter, driven by improved North America
results and earnings from the Fermacell business which was acquired
during the quarter. Further, although our North American Fiber
Cement segment EBIT margin of 24.7% is in the upper part of our
target range, we will be pressured by a continued inflationary
environment impacting input and freight markets throughout the
year. Finally, on 2 July 2018, we made a payment of US$103.0
million to AICF, representing 35% of our free cash flow, as defined
by the AFFA, for fiscal year 2018.”
Outlook
We expect to see the steady growth in the US housing market to
continue in fiscal year 2019. The single family new construction
market and repair and remodel market are expected to grow similarly
to the year-on-year growth experienced in fiscal year 2018. 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 the top end of our stated target range of 20% to 25% for
fiscal year 2019. This expectation is based upon the Company
continuing to achieve strong operating performance in its plants,
stable exchange rates and a moderate inflationary trend for input
costs.
Net sales from the Australian business are expected to trend
above the average growth of the domestic repair and remodel and
single family detached housing markets in the eastern states of
Australia.
Full Year Earnings
Guidance
Management notes the range of analysts’ forecasts for net
operating profit excluding asbestos for the year ending 31 March
2019 is between US$313 million and US$358 million. Management
expects full year Adjusted net operating profit to be between
US$300 million and US$340 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
2018 was US$291.3 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 2018 for additional information
regarding the Company’s results, including information regarding
income taxes, the asbestos liability and contingent
liabilities.
As of 30 June 2018, the Company changed its reportable operating
segments. Previously, the Company reported on four operating
segments: (i) North America Fiber Cement, (ii) International Fiber
Cement, (iii) Other Businesses, and (iv) Research and Development.
As of 30 June 2018, the Company began reporting on five operating
segments: (i) North America Fiber Cement, (ii) Asia Pacific Fiber
Cement, (iii) Europe Building Products, (iv) Other Businesses, and
(v) Research and Development. The significant changes to how
certain businesses are reported in the new segment structure are as
follows: (i) our European Fiber Cement business as well as the
newly acquired Fermacell business are now reported as the Europe
Building Products segment, and the remaining businesses that were
historically reported in the International Fiber Cement segment are
now reported in the Asia Pacific Fiber Cement segment. The Company
has revised its historical segment information for the three months
ended 30 June 2017 to be consistent with the new reportable segment
structure. The change in reportable segments had no effect on the
Company's financial position, results of operations or cash flows
for the periods presented. Readers are referred to Note 15 of our
condensed consolidated financial statements for further information
on our segments.
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 2018.
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 2018.
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 2018; 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180809005862/en/
Media/Analyst Enquiries:James HardieJason Miele, +61 2
8845 3352Vice President, Investor and Media
Relationsmedia@jameshardie.com.au
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