Record quarter: James Hardie (ASX:JHX) share price pops on 29% profit jump

It was a fourth consecutive quarter of double-digit sales growth for James Hardie…

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The James Hardie Industries Plc (ASX: JHX) share price is edging higher in early trading today. It is currently up 0.26% to $54.47, having earlier jumped to $55.27. This comes after the company released its results for the quarter ended 30 September 2021.

It was a record second quarter for the construction materials company, with a number of investment highlights to report.

Let’s get straight into it.

James Hardie share price rises on record quarterly results

Key takeouts from the quarter include:

  • Global net sales increased 23% year on year to US$903.2 million, a record result;
  • Adjusted net income up 29% from the year prior at US$154.9 million;
  • North America fibre cement segment net sales also increased 23% to US$635.3 million;
  • Europe building products sales increased to 104.5 million euros, also a 23% gain from the year prior;
  • Net income guidance range raised by 2%–5% to a new spread of US$580 million to US$600 million; and
  • FY22 first half ordinary dividend of US40 cents per share payable 17 December 2021.

What happened this quarter for James Hardie?

Building on positive momentum achieved earlier in the year, James Hardie came in with another strong result for the quarter.

A set of record results in net sales of US$903 million was carried through to the company’s bottom line, recognising net income growth of almost 30% to US$155 million.

Global adjusted earnings before interest and tax (EBIT) increased by 26% year on year to US$206 million. This was also a record.

From this result, operating cash flows came in at US$357.5 million, driven by the company’s LEAN manufacturing performance, alongside integrating its supply chain with customers.

The company also saw strengths across its various countries of operations. For instance, North American sales saw a record quarter with a corresponding 23% gain over Q2 FY21.

James Hardie attributes this to its “high-value product mix strategy” that resulted in a price/mix growth of more than 9% during the quarter.

Separately, net sales in its Asia Pacific fibre cement segment increased 15% to A$196.6 million, also a record result. This resulted in an adjusted EBIT margin of almost 31%.

Commenting on its sustainability initiatives, the company said environmental, social, and corporate governance (ESG) is a part of its strategy, and that it is woven into operations and its core strategy.

What is management saying?

Commenting on the quarter, James Hardie’s CEO Dr Jack Truong said:

We continue to make excellent progress on our stated global strategy. Our strong execution on this strategy is reflected in second quarter global price/mix growth of +9%, including North America price/mix growth of +9%, Europe price/mix growth of 8% and Asia Pacific price/mix growth of +4%. Our growth momentum in accelerating high value products penetration, which underpins price/mix, is the result of 1) enabling our customers to make more money by selling more James Hardie products and 2) marketing directly to the homeowners to create demand of our high value products through our customers.

What’s next for James Hardie and its share price?

The company updated its guidance for the fiscal year ending 31 March 2022. It now forecasts a net income range of US$580 million to US$600 million, up from a range of US$550–$590 million.

This guidance is subject to a number of risk factors, as alluded to by the company, including the ongoing effects of the COVID-19 pandemic.

In the past 12 months, the James Hardie share price has climbed 43%. It has also rallied 43% this year to date.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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