Building products supplier James Hardie predicts another strong year ahead for the Australian housing market.
Demand for units and high density housing could be dampened by recent interest rate rises for investor loans, but James Hardie expects to benefit from its focus on single-family dwellings.
There were 29,343 approvals for construction of detached houses during the three months to June 30, up three per cent on the prior corresponding period, and James Hardie expects its overall performance in Australia to follow a similar trend in the year to March.
“The market in Australia has been very good for the last several years. It’s been very hot,” chief financial officer Matt Marsh said.
“It’s a good market for us. It’s a similar market index to what we experienced last year and we grew above our market index. We feel we’re on the same track and trajectory both within the quarter and for this year.”
The company’s first quarter sales in Asia Pacific, which includes Australia, New Zealand and the Philippines, rose 15 per cent to $117.4 million.
A 17 per cent depreciation in the Australian dollar against the US dollar meant the value of those sales dropped four per cent to $US91.3 million, but Mr Marsh said the company had no plans to react to currency swings.
He and chief executive Louis Gries said James Hardie is focused only on growing market share.
“We’ve heard that the Australian dollar is going to dip into the 60s as late as 12 months ago and I’ve been hearing for two years that the Federal Reserve is going to raise rates,” Mr Marsh said.
“I’m sure at some point they will and at some point the prognosticators will be right but none of those things are things we can affect.”
Citing uncertainty over the US housing market and costs, James Hardie forecast a net operating profit between $US240 million and $US270 million in the year to March 31.
That is below the $US244 million to $US286 million range expected by analysts, but higher than the previous year’s US221.4 million.
Shares dropped 81 cents to $17.14 shortly after trading began on Friday, but recovered to close steady at $17.95.
The company’s net profit in the three months to June more than doubled from a year ago to $US60 million, largely due to an improved performance from its US and European operations.
JAMES HARDIE’S STRONG START TO YEAR
* First quarter net profit of $US60m, up from $US28.9m
* Adjusted profit up 27pct to $US63.5m
* Sales up 3pct to $US428.3m