James Hardie shares dive on Q1 result, FY26 guidance downgrades
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More news: James Hardie shares tanked in early trading after the building products group reported a 60% drop in first-quarter net profit and downgraded its full-year guidance.
Shares were down 27.6% to $32.12 at 10:55am AEST, taking losses to 36% since the turn of the year.
RBC Capital Markets analyst Matthew McKellar said the company's updated adjusted EBITDA guidance of $1.05 billion to $1.15 billion for FY26 has fallen 21% below consensus estimates at the midpoint.
The first-quarter result also missed expectations, with adjusted EBITDA of $226 million below average forecasts of $257.9 million, he said.
James Hardie posts 60% drop in Q1 net income as sales slide
The news: Building materials manufacturer James Hardie’s reported first-quarter net income of USD62.6 million ($97 million), down 60% compared to the previous corresponding period, when it posted net income of USD155.3 million.
Chief executive Aaron Erter said the result was "largely as we had anticipated" and reflected "moderating growth expectations by customers as uncertainty built throughout April and early May."
The numbers: James Hardie’s net income for the first quarter fell short of the market consensus estimate of USD150.3 million, according to Visible Alpha. Sales for the first quarter came in at USD899.9 million, which was 9% lower than the USD991.9 million in the first quarter of 2024 and behind the expected USD976.6 million.
James Hardie has cut its full-year free cash flow guidance from "at least $500 million" to "at least $200 million".
The context: The company said that US-based AZEK, which James Hardie acquired last month, exceeded guidance for the quarter. Erter said the teams are "working diligently to integrate and deliver on cost and commercial synergies on an accelerated timeline, positioning ourselves to capture the expansive material conversion opportunity ahead".
However, Erter said broader demand in its North America business is "challenging" with uncertainty a "common thread through conversations with customer and contractor partners."
What they said: "In May, we built into our full-year guidance an assumption that end market demand could decline by approximately mid-single digits, driven by expectations for further decline in repair & remodel," said Erter.
"Over the course of the summer, single-family new construction activity has been weaker than anticipated and we have adjusted our expectations to account for softer demand.
"... Amidst this dynamic, we are also conservatively expecting to benefit from recent homebuilder exclusivity wins and new product launches more so in FY27 and beyond, rather than in the back half of FY26 as previously planned."
The sources: ASX, RBC Capital Markets research
