Building materials company James Hardie has delivered a first-half net operating profit of $268 million, a rise of 22 per cent from the corresponding period last year.
However, the company’s net profit for the three months to September was just $183.1m. This was a rise of just 2 per cent compared to the previous corresponding period. As such, it conceded that it may fall short of analyst expectations for the full-year.
The company said in a statement that the flat result was caused by adjusted income tax expense and higher gross interest expense offsetting the favourable performance by its operating business units during the current quarter.
James Hardie CEO Louis Gries said, “Financial returns in the second quarter were again strong in all business units driven, in particular, by the strong operating performance in our USA plants and lower input and freight costs relative to the same period last year. Primary Demand Growth (“PDG”) however, in our USA business, again tracked below our targeted level.
“The reduction in USA PDG over the last several quarters is a key focus area for management, and it is expected to take several quarters to lift our growth rate back to targeted levels. We do not feel that the reduced PDG has been driven by external factors.
“On 19 October we announced a management realignment that re-established the JHBP President's position and Management Team. It is envisaged that the new management will better position us to address the execution gaps that we feel are contributing to the reduction of PDG.”