About James Hardie Industries Plc

James Hardie Industries plc (James Hardie or JHX) manufactures and sells fibre cement, fibre gypsum and cement-bonded building products for interior and exterior building construction applications, primarily in the US, Australia, Europe, New Zealand and the Philippines. Founded in 1888 by Scottish born James Hardie, who emigrated to Melbourne and began importing a fibro-cement roofing product made in France, JHX has been listed on the ASX since 1951.

June quarter results

James Hardie reports on a 31 March year-end basis which means the June quarter result is the first quarter of the 2025 financial year.

First quarter net sales in the Company’s largest market, being North America, were up by 5 percent to US$729 million, boosted by average sales price increases of 4 percent, compared to the previous corresponding quarter. However, unfavourable labour, freight, and cement prices offset much of this higher sales price, leaving the Company’s EBITDA margin flat at 36.1 percent.

Asia Pacific net sales were down 3 percent to US$135 million, resulting from a soft Australian building products market where sales volumes declined by 9 percent. The Asia Pacific region includes Australia, New Zealand and the Philippines. Although the Company’s average net sales price increased by 7 percent, this was not enough to offset the weaker sales volume, resulting in a 2 percent drop in the EBITDA margin from 36 percent to 34 percent.

Europe building products sales performed well with a 7 percent net sales and sales volume lift boosted by a 3 percent higher average net sales price. Total net sales were a record US$127 million. The Europe EBITDA margin remained flat at 15.5 percent and was impacted by higher freight and paper costs and expenses incurred in expanding the European sales team to support high-value products growth.

Total Group net sales for the June quarter are up 4 percent to US$992 million with adjusted net income 2 percent higher at US$177 million.

Extension of on-market buy-back

James Hardie has nearly US$1 billion in liquidity at 13 August and with a subdued short-term growth outlook has decided to deploy excess capital to shareholders. The Company has extended its existing on-market share buy-back to 31 October 2024 as it seeks to purchase up to an additional 9 million shares for a maximum of US$50 million. This extension increases the original buy-back amount to US$300 million. To date US$225 million of this program has been completed, leaving US$75 million remaining.

The Company considers that at the completion of the buy-back it will have ample capacity to invest in organic growth as the market for its products improves. In the June quarter the Company repurchased 2.4 million shares for US$75 million, representing an average share price of approximately A$47.60. During the previous financial year, the average share buy-back price was approximately A$36.70.

Looking Ahead

The Company operates in three geographically distinct markets; North America (81 percent of Group earnings), Asia Pacific (15 percent) and Europe Building Solutions (4 percent). The key to James Hardie’s earnings growth prospects is a recovery in the US renovations market. Remodelling, repair, and renovation products account for about 65 percent of global product revenue.

Trading conditions in the US are unlikely to improve until US mortgage interest rates are reduced. US residential mortgage interest rates are driven by the US Federal Reserve Cash rate. However, American homeowners have long-dated fixed rate mortgages and so a reduction in the Fed’s Cash rate is subject to a lengthy lag period before the lower rate is broadly reflected in mortgage rates. This implies that growth in James Hardie’s sales volumes is likely to be gradual.

The soft economic outlook for the Company’s largest market means that investor patience is required before consistent earnings growth returns.

James Hardie’s key competitive advantage are its proprietary fibre cement roofing and façade cladding products. Product advantages include lower required maintenance, lower weight, and easier handling.  By leveraging this competitive advantage, James Hardie has been able to build significant market share in the US over a lengthy period.

The Company has established a dominant market share in the world’s largest housing market with a highly competitive building product. Any US housing market stimulus through lower interest rates should gradually translate into higher sales volumes and improved earnings.

The Company maintains a low leverage ratio and with a dominant market share in the world’s largest housing market, investor patience is likely to be rewarded in the medium-term.