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James Hardie’s shares down after net profits miss

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James Hardie shares have fallen after a strong rise in underlying profit still failed to meet market expectations.

The fibre-cement maker posted a small rise in sales in its United States and Europe business in the three months to December 31, despite ongoing weakness in housing construction.

However, chief executive Louis Gries said on Tuesday that there remained little evidence that a sustainable recovery in the US housing sector was underway.

The Australian market was also unlikely to experience an immediate pickup in housing construction, he said.

Net operating profit for the third quarter of its fiscal year was $US27.7 million ($A25.97 million), up 32 per cent from $US21 million ($A19.69 million) in the previous corresponding period.

Analysts had expected a better performance, with Commonwealth Bank forecasting a profit of $US34.1 million ($A31.79 million).

James Hardie shares dropped 32 cents, or 4.2 per cent, to $7.23 on Tuesday.

Mr Gries said gains in category share and a more stable operating environment in the third quarter contributed to a stronger performance in the US.

Asia Pacific operations also contributed strongly to the results, despite weakness in the Australian housing market.

The results took the company’s net operating profit for the first nine months of its fiscal year to $US108.3 million ($A101.52 million), up 32 per cent on $US82.2 million ($A77.05 million) in the same period in the previous year.

Net operating profit excludes James Hardie’s asbestos-related and regulatory costs, and tax adjustments.

Mr Gries said he still expected James Hardie to post a full year net operating profit of between $US130 million and $US140 million ($A121.86 million to $A131.23 million).

The company was taking a cautious approach to the final quarter of the year and there was the possibility of a better than expected Spring season in the US, he said.

“March is always a pick-up month for us,” Mr Gries told analysts.

“We don’t know exactly how March is going to go, but we are pretty confident we’re going to bring things in where we have been forecasting.

“We see no reason to change our forecast by any real degree.”

A recent legal victory over the Australian Taxation Office that resulted in a $US265.8 million ($A247.83 million) refund contributed to a statutory net profit of $US123.6 million ($A115.24 million) in the nine months to December.

That was a turnaround from a loss of $US345.2 million ($A321.86 million) in the same period in the previous year.