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Spark in ASX industrial and material stocks: James Hardie, Amcor and BlueScope

  • December 23, 2019 03:15 PM AEDT
  • Team Kalkine
Spark in ASX industrial and material stocks: James Hardie, Amcor and BlueScope

All the three companies James Hardie, Amcor, BlueScope are leading companies that have made significant place in the global arena in their niche sub segments. The growth of the industrial and material segment depends upon the raw materials sourced or they themselves form the raw material for various industries. The segment depends upon the state of the economy, the government’s focus on infrastructure, availability of labour, capital, power, technology, etc. Also, in the September 2019 quarter, the All groups CPI posted 1.7 percent rise over the 12 months as against to an increase of 1.6 percent across the 12 months to this year June quarter.

Gold MTF non-AMP

James Hardie Industries plc (ASX: JHX)

Outlook for FY 20 & Decent Performance in the second quarter & half year 2020:

James Hardie Industries plc, a leading company in the world that manufactures fibre cement siding and backerboard, notified on half-year results for the period closed 30 September 2019.

The company paid FY20’s first half ordinary dividend of US10 cents per security to CUFS holders on 20 December 2019. Meanwhile, for FY 2020, JHX anticipates new construction starts to be in the range of around 1.2 million and 1.3 million. In the segment of North America Fiber Cement, EBIT margin is estimated to be amid 25 percent and 27 percent in FY 20 period. The addressable underlying market of Australia is anticipated to post high single digit percent reduction in FY 2020 versus FY 2019.

However, the volume from the business in Australia is anticipated to develop above the market. The addressable underlying market of Europe in financial year 2020 is expected to decline marginally versus FY19. Further, for fiscal 2020, the company projects adjusted net operating profit to be in the range of US$340 million and US$370 million compared to FY 19 adjusted net operating profit of US$300.5 million.

Moreover, for the second quarter of FY 20, the company has reported 22% increase in the Group Adjusted net operating profit (NOPAT) of US$98.6 million & 17% growth for the half year 2020 compared to the prior corresponding periods. Group Adjusted EBIT increased by 26% to US$134.2 million during the second quarter. The company has delivered 2 percent increase in the group net sales standing at US$660.1 million for the second quarter and US$1,316.9 million for the 6 months during 2020 period.

Half Year Ended FY 20 Financial Performance (source: Company’s Report)

JHX stock was trading at $28.79, moving up by 0.947 percent (at AEDT 1:43 PM). In the last three months period, the stock gave a return of 15.51 percent.

Amcor plc (ASX: AMC)

Strong Performance for First Quarter 2020:

Amcor plc, a leading company in the world (have presence in more than 40 countries) that manufactures & develops flexible packaging and rigid packaging containers. AMC caters to variety of industries like food, beverage, pharma, medical-device, home and personal-care etc.

The company for the first quarter of FY 20 has reported 38.8% increase in the net sales to $3,140.7 million. Net income attributable to Amcor plc declined by 32.9% to $66 million for the first quarter of FY 20 on the back of the impact of Bemis related acquisition, transaction and integration cost. Adjusted earnings before interest and tax from continuing operations increased 84.4% to $290.5 million during the period. Gross profit increased by 38.8%, to 546.7 million for the 1Q FY 20 mainly driven by the Flexibles reporting segment due to the Bemis acquisition.

Meanwhile, the company had started restructuring activities related with the acquisition of Bemis in the fourth quarter of FY19 and expects to realize about $180 million of pre-tax synergies on the back of procurement, supply chain, and general and administrative savings by the end of FY22. The company’s total Plan pre-tax restructuring costs were projected to be approximately $200 million. Additionally, the company has paid a quarterly cash dividend of 11.5 cents per ordinary share on December 17, 2019 to its shareholders.

1Q FY 20 Financial Performance (source: Company’s Report)

AMC stock was trading at $15.68, down by 0.127 percent (at AEDT 2:07 PM). In the YTD period, the stock gave a return of 18.31 percent.

BlueScope Steel Limited (ASX: BSL)

Updated on the regulatory proceedings:

BlueScope Steel Limited, the company that demerged from BHP Billiton on 22 July 2002, is into the manufacturing of flat product steel. The company takes the raw material from various countries like New Zealand, Pacific Islands, North America, and Asia.

Recently, the company gave an update on the regulatory proceedings. According to which, the company acknowledged the receipt of ACCC’s Statement of Claim, engaged in cartel conduct. The claim was filed by the ACCC in the Federal Court and BSL will file its response with the Court in March 2020. On the other hand, the company has reaffirmed the first half of FY20 guidance.

According to this, for the first half of financial year 2020, the company projects the underlying earnings before interest and tax to be of approximately 45 percent lower than the second half FY19 underlying EBIT standing at $499 million. The guidance was based on the back of softer commodity steel prices and expands throughout BSL’s steelmaking businesses in the US, Australia and New Zealand regions.

Moreover, North Star BlueScope Steel’s business is performing well as it positively benefitted from better realised raw material costs and selling prices. Australian Steel Products’ business is performing in accordance with the previous anticipations. In Building Products, China business is performing solid due to strong demand and margins. India is also performing well, and North America is performing in line with the company’s expectations.

BSL stock was trading at $15.570, down by 0.702 percent (at AEDT 2:16 PM). In the last six months period, 34.48 percent.


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