* Cuts FY earnings f'cast to $140-$150 mln vs $140-160 mln
* Q2 profit $34.8 mln vs analysts' estimate $38.4 mln
* Shares touch 3-month low before trimming losses
By Naomi Tajitsu
WELLINGTON, Nov 15 Australian building materials
group James Hardie Industries Ltd cut its
full-year earnings forecast after posting a surprisingly weak
quarterly profit, sending its shares to a near three-month low.
The 16 percent drop in second-quarter profit came as the
world's largest maker of fibre cement products - which earns
two-thirds of its revenue in the United States and Europe - was
hurt by falling product prices and weak consumer confidence.
James Hardie said on Thursday that it now expects profit in
a range of $140 million to $150 million for the financial year
ending in March, lower than its previous projection of $140
million to $160 million. The company's chief executive, Louis
Gries, said profit would likely come in at the middle of the new
"We think we'll be looking more like flat, than right at the
bottom of the range we gave you," Gries told reporters.
James Hardie said it saw the early stages of a slight
recovery in the U.S. housing market, and Gries said the market
would improve next year despite the possible impact of U.S.
Still, the company said the extent and rate of improvement
was uncertain given tight credit conditions, high unemployment
and a low consumer confidence.
"Management cautions that housing market conditions remain
uncertain and notes that some input costs remain volatile."
It added that the Australian market remained subdued and
consumer confidence was sluggish, while the New Zealand market
remained near cyclical lows despite some improvement. The
Asia-Pacific region accounts for approximately one-third of the
Shares of James Hardie fell as much as 6.5 percent to
A$8.320, their lowest since late August, before trimming losses
to trade around A$8.700.
"The initial impression was that the guidance was off ...
the stock price had some rosy assumptions built into it," said
Peter Esho, chief market analyst at CityIndex.
Second-quarter net profit - excluding tax adjustments and
the impact of payments related to a compensation fund for
asbestos victims - fell to $34.8 million from $41.2 million a
year earlier. The company's earnings were reported in U.S.
The result was below the average forecast of $38.4 million
in a Reuters poll of five analysts. Their estimates had ranged
from $21 million to $48 million.
James Hardie announced an interim dividend of 5 cents per
share for the first half, higher than 4 cents a year earlier.
A higher accounting provision related to liability claims
offset the impact of higher sales volumes in the three months to
September. That resulted in a 35 percent fall in profit for the
first half, to $78.6 million.
Revenue from the United States and Europe fell 7 percent in
the second quarter, for a 1 percent fall in the first six
months, due to lower prices, along with higher manufacturing and
Cautious optimism about the U.S. market has been tempered by
sluggishness in Australia's housing market, with the firm saying
that consumer confidence remained low in Australia even as the
Reserve Bank of Australia has been cutting interest rates.