James Hardie reported an operating net profit after tax of $140 million, which was towards the top end of guidance. Of course that excludes the asbestos issues, which deservedly hang over the stock like the Grim Reaper. There are also questions about asset impairments, ASIC expenses and tax adjustments. The company is paying a final dividend of 38¢ per share taking FY12 dividend per share to 42¢ per share. The dividend yield for this financial year is up above 9%, based on a 30% payout of NPAT. A 5% share buyback was also put in place. Deutsche has a hold on the stock, despite the high yield. Indeed it is forecasting it will drop sharply next financial year to below 2%:
Management provided a softer outlook statement than expected, with the company planning for the US market to be up “only slightly” over the prior year. DB expects US housing growth of 27% to 895k in FY13. In Australia, residential activity is expected to continue to decline in FY13 and NZ continues to operate at “subdued” levels.
James Hardie’s results cast an interesting light on the US housing market. The anticipated recovery is not showing through, and it will probably bounce along the bottom for some time. That negative equity for US households will continue for some time yet.
The stock is on a fullish earnings multiple of 20 times for this financial year, suggeesting that it is a pretty optimistic building sector play. The company does seem to have made gains in market and category share, both in the US and Australia, which may partly offset the gloomy prospects in the sectors.