Why did James Hardie (ASX:JHX) cut its profit guidance?

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Why did James Hardie (ASX:JHX) cut its profit guidance?

 Why did James Hardie (ASX:JHX) cut its profit guidance?
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Highlights

  • James Hardie cut its profit guidance for the three-month period ending 30 June 2022.

  • James Hardie reported sales growth of 19% to US$1 billion in the first quarter.

  • The adjusted profit grew 15% to US$154.3 million.

James Hardie Industries plc (ASX:JHX) on Tuesday announced a cut in its profit guidance for the three-month period ending 30 June 2022, weighed by inflation, weakness in European markets, a strong US dollar, and the US housing market. The company reported a margin decline in all three major segments.

The ASX-listed producer and marketer of high-performance fiber cement and fiber gypsum building solutions slashed its financial 2023 profit guidance to between US$730 million and US$780 million following its Q1 results.

In its earlier forecast, James Hardie had shared a forecast of between US7$40 million and US$820 million. However, it still represents a 22% growth on FY2022. James Hardie reported a net income of US$620.7 million in the fiscal year 2022.

What happened in Q1?

James Hardie reported sales growth of 19% to US$1 billion in the first quarter. The adjusted profit grew 15% to US$154.3 million.

The company also reported a 28% rise in US market sales to US$740.1 million and earnings surged 13% to US$191.8 million.

Its Asia Pacific market rose 9% to $200.1 million, and earnings rose 2% to $51.3 million. The European market grew 7% to Euro110.8 million. Group-wide adjusted earnings before interest and tax (EBIT) margin declined 0.6 percentage points to 20.8%.

What did James Hardie’s management say?

Commenting on the financial results, Jason Miele, James Hardie's chief financial officer (CFO) said, "Our primary reasons for adjusting guidance downward are: continued inflationary pressures globally, our lowered expectations regarding Europe segment Ebit, the impact of a strengthening U.S. dollar on the translation of our APAC and Europe earnings and housing market uncertainty.”

James Hardie’s interim CEO Harold Wiens said, “We are laser focused on two things we want to deliver during this time of uncertainty: first, delivering strong results and second, accelerating and expanding our competitive advantages. We have already made adjustments to ensure we can deliver on both of these areas of focus.”

James Hardie’s share price snapshot

James Hardie’s share price has fallen over 35% on a year-to-date (YTD) basis. In the past 12 months, the share price has dipped over 28%. The stock has risen more than 6% in the past month. In the past six months, the stock has fallen nearly 22%.

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