James Hardie expects no major improvement in the housing market this year but says the sector has now stabilised after recent interest rate cuts.
Chief executive Louis Gries says the building products maker expects the housing market to be flat to slightly higher.
“The operating environment in Australia is likely to remain relatively subdued and the company is not anticipating any substantial increase in net sales this calendar year,” he said.
Mr Gries said recent interest rate cuts had prevented further declines in the housing market.
“That’s the reason for the optimism,” he said.
Mr Gries made the comments as James Hardie posted a net profit of $US45.5 million ($A47.19 million) for the year to March 31, down 92 per cent from $US604.3 million in the previous 12 months.
Full year net profit fell significantly because of changes to the company’s asbestos liabilities and the effect of a legal battle with the Australian Taxation Office (ATO).
And the previous year’s profit was boosted by a $US485.2 million ($A492.31 million) benefit from a legal victory against the ATO in March 2012.
Net operating profit excluding legal and asbestos-related issues for the year to March 21 was down two per cent to $US140.8 million ($A146.04 million).
Full year operating earnings in the Asia Pacific arm fell due mainly to strong competition and weak housing markets in Australia and the Philippines.
Mr Gries said James Hardie did not use its experience in handling the downturn in the US housing market well enough when it happened in Australia.
“It’s a little bit disappointing because we had just been through it in the US,” he said.
“We had a blueprint on how to handle a downturn and the downturn here wasn’t as severe as in the US.”
The New Zealand arm increased its earnings during the year and Mr Gries said he expected that to continue into fiscal 2014.
Operating earnings from James Hardie’s US and Europe operations were steady and sales higher, amid improved conditions in the US housing market.
James Hardie expects a sustainable recovery of the US housing market but said it would take a protracted period.
IG market strategist Evan Lucas said, after taking out the impairment charges, James Hardie’s result was at the top end of guidance.
He said the outlook for the US and Europe for the coming year appeared strong.
James Hardie shares were nine cents lower at $10.36 on Thursday.
