James Hardie posts drop in earnings on US housing slump

Monday 17th November 2008

James Hardie Industries, the biggest seller of home siding in the US, posted a 26% slump in second-quarter earnings, reflecting the housing slump in America. It canceled its first-half dividend.

Operating profit excluding foreign exchange benefits to its asbestos liabilities, fell to US$36.2 million, or 8.4 cents a share, in the three months to September 30, from $49.2 million, or 11 cents, a year earlier, the company said in a statement to the ASX. Sales fell 12% to US$342 million.

The US housing recession is eroding earnings at companies including Fletcher Building amid rising foreclosures and lack of credit for mortgages. New home starts are forecast to fall to the lowest level since records began in 1959 last month, according to a Bloomberg survey. The Commerce Department releases the figures on November 19.

"The US housing market continued to decline sharply during the quarter," said chief executive Louis Gries. "Pricing has remained reasonably flat," he said.

Shares of James Hardie dropped 9% to A$4.31 on the ASX, bringing their six-month decline to 19%. On the NZX, Fletcher Building fell 1.9% to $5.66.

James Hardie this month called a temporary halt to production from plants at Fontana, California and Summerville, South Carolina, reducing capacity in anticipation of a shortfall in demand.

Net income at the building products company jumped to US$153.5 million from $19.1 million in the latest three months, mainly reflecting the decline of the Australian dollar against the US dollar, it said.

By Jonathan Underhill

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