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Cuts annual profit view for third time
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Shares decline as much as 8.7%
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Q3 profit, sales down on weak volumes
(Recasts with outlook, adds analyst comments and share moves)
By Jaskiran Singh
Feb 14 (Reuters) - James Hardie Industries cut
its annual profit forecast for a third time on Tuesday, sending
its shares down nearly 9%, as aggressive monetary policy
tightening across the globe slows the housing market and dents
demand for building materials.
Central banks around the world have jacked up interest rates
rapidly since early 2022 to tame runaway inflation, squeezing
consumer capacity to borrow and in turn impacting housing
demand.
"It's a difficult period for companies tied to the real
estate sector, with central banks continuing their aggressive
tightening cycles," said Josh Gilbert, a market analyst at
Israeli online brokerage firm eToro.
"Not only are mortgage rates much higher than average, but
inflation continues to eat into household budgets."
Dublin-based James Hardie now expects full-year adjusted net
operating income between $600 million and $620 million, down
from its earlier forecast of $650 million to $710 million. That
compares with $620.7 million posted last year.
For the third quarter, adjusted net income fell to $129.2
million from $154.1 million a year earlier, missing Refinitiv
estimate of $155.0 million.
Shares of the company slumped as much as 8.7% to A$28.975 in
their biggest intraday drop since Nov. 8.
The stock, a star performer in 2021 on a housing market
boom, has declined about 13% since mid-August, when the company
first cut its fiscal 2023 earnings forecast blaming soaring
operating costs and a cooling property market.
If inflation continues to cool down in the second half of
this year and the U.S. Federal Reserve pivots to rate cuts,
there is a possibility that it would boost consumer sentiment,
affordability, and home builder confidence, Gilbert said.
"The bottom line here is that it's going to be a difficult
few months for new CEO Aaron Erter to navigate, but there could
be some positivity on the horizon in FY24," Gilbert added.
(Reporting by Jaskiran Singh and Sameer Manekar in Bengaluru;
Editing by Shailesh Kuber and Subhranshu Sahu)
