James Hardie Reports FY26 Growth as AZEK Integration Builds Momentum

About James Hardie Industries Plc

James Hardie Industries Plc (ASX: JHX) is a global building products company focused on exterior home and outdoor living solutions. Its portfolio includes fibre cement, fibre gypsum, composite and PVC decking, railing and related building products. The company operates across North America, Europe, Australia and New Zealand, with brands including Hardie, TimberTech, AZEK Exteriors, Versatex, fermacell and StruXure.

Sales growth was supported by AZEK

The headline result showed strong reported sales growth, largely reflecting the contribution from the AZEK acquisition. Full-year net sales increased 25 per cent to US$4.84 billion, while fourth-quarter net sales rose 45 per cent to US$1.40 billion. However, organic net sales declined 2 per cent for FY26 and 1 per cent in Q4, highlighting the challenging market backdrop.

The company said its markets declined mid-to-high single digits during the year, with affordability pressure, inflation and weaker housing activity weighing on demand. Against that backdrop, the 2 per cent organic sales decline was presented as evidence of relative resilience, supported by pricing discipline, product mix and cost actions.

Statutory profitability was weaker. FY26 net income declined 75 per cent to US$104 million, while net income per diluted share fell to US$0.19. Operating income declined 32 per cent to US$447.6 million. The decline reflected acquisition-related expenses, higher interest costs, amortisation of acquired intangibles, restructuring costs and other integration-related impacts.

Adjusted EBITDA showed stronger underlying performance

While statutory profit declined, adjusted EBITDA increased 17 per cent to US$1.27 billion for FY26. Fourth-quarter adjusted EBITDA increased 42 per cent to US$380.9 million, exceeding company guidance and expectations. Adjusted EBITDA margin for FY26 was 26.2 per cent, down from 27.8 per cent in FY25, while Q4 adjusted EBITDA margin was 27.1 per cent.

This suggests underlying earnings remained more resilient than statutory profit indicated. The company said the result reflected disciplined execution, cost actions and the strength of its business model, despite weaker market conditions and weather disruptions in February and early March.

The AZEK acquisition was the major strategic event of the year. James Hardie said cost synergies are ahead of schedule and commercial synergies remain on track. The company has increased confidence in reaching its US$125 million cost synergy target ahead of the original three-year timeline and expects to reach a US$125 million run-rate commercial synergy milestone exiting FY27.

Siding and Trim remained the largest segment

Siding and Trim remained James Hardie’s largest business. FY26 net sales increased 3 per cent to US$2.96 billion, while Q4 net sales increased 7 per cent to US$767 million. However, on an organic basis, Q4 net sales declined 7 per cent, reflecting weaker volumes from softer market demand, partly offset by price and mix.

Exterior product volumes declined high-single digits for the full year, with single-family volumes down low double digits and multi-family volumes up mid-single digits. Interior product volumes declined low-double digits. The Southeast and Western regions were the main areas of weakness, while Texas declined low-double digits for the year.

Siding and Trim adjusted EBITDA declined 5 per cent to US$951.4 million for FY26. Adjusted EBITDA margin fell to 32.1 per cent from 35.0 per cent. The company said volume declines weighed on margins, partly offset by cost actions, disciplined SG&A management and pricing.

Deck, Rail and Accessories adds a new platform

The AZEK acquisition added the Deck, Rail and Accessories platform, which delivered FY26 net sales of US$795.2 million and adjusted EBITDA of US$224.8 million. Q4 net sales were US$345.3 million, with adjusted EBITDA margin of 28.2 per cent.

The company said volumes were broadly flat in Q4, with sales growth mainly driven by price and mix. Strong early buy orders led to elevated channel inventory levels, while weather disruptions softened sell-through during February and early March. Production was reduced exiting the quarter to better align with channel conditions.

Despite that temporary inventory pressure, the company expects growth from product innovation, material conversion from wood, contractor engagement and expanded channel presence. The combination with AZEK is expected to provide broader distribution, more shelf space and a more complete exterior solutions offering.

ANZ and Europe delivered solid regional outcomes

Australia and New Zealand delivered Q4 net sales growth of 18 per cent to US$139.6 million, or 6 per cent in Australian dollars. Full-year ANZ net sales were broadly flat in US dollars at US$520.6 million and down 1 per cent in Australian dollars. Adjusted EBITDA for the region declined 2 per cent to US$177.7 million, while full-year adjusted EBITDA margin was 34.1 per cent.

The company said ANZ remains focused on evolving from a fibre cement business into a broader building products platform, while maintaining manufacturing discipline and productivity improvements.

Europe net sales increased 13 per cent to US$556.9 million for FY26, or 4 per cent in euros. EBITDA increased 17 per cent to US$82.2 million. Market conditions remained challenging, particularly in Germany, but James Hardie continues to focus on fibre gypsum, flooring systems, underfloor heating, fire protection and prefabricated construction opportunities.

Cash flow and leverage remain key priorities

Operating cash flow was US$589.8 million for FY26, while free cash flow was US$314.1 million after capital expenditure and proceeds from asset sales. Capital expenditure totalled US$383.9 million. The company said FY27 priorities are to invest in organic growth, maintain capital discipline and reduce leverage, with net leverage targeted at around 2.0 times by the end of the second quarter of FY28.

No dividend was declared or paid for FY26, reflecting the company’s capital allocation focus following the AZEK acquisition.

Outlook

James Hardie expects FY27 total net sales of US$5.25 billion to US$5.41 billion and total adjusted EBITDA of US$1.45 billion to US$1.50 billion. Free cash flow is expected to exceed US$500 million, supported by higher profitability, lower integration and acquisition-related costs, and disciplined capital spending.

The key positives are stronger adjusted EBITDA, synergy progress, a broader outdoor living platform and expected organic growth in Siding and Trim. The main risks are weak housing activity, affordability pressure, elevated interest rates, integration execution and channel inventory normalisation. Overall, James Hardie appears to be entering FY27 with a larger platform, stronger synergy visibility and a clearer path to improved cash generation.