James Hardie share price tumbles 8% as housing market downturn impacts sales

Falling sales due to the US and Australian housing market downturns have prompted the company to lower its FY23 guidance considerably.

| More on:
Three builders analyse their blueprints on site representing the growth in the Johns Lyng share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The James Hardie share price is diving after the company released its Q3 FY23 results this morning
  • Housing downturns in North America and Asia-Pacific have led to "lower than expected" sales in Q3 FY23 
  • The company has reduced its full-year guidance from US$650 million to US$710 million to US$600 million to US$620 million

The James Hardie Industries plc (ASX: JHX) share price is diving after the company released its Q3 FY23 results this morning.

The James Hardie share price opened at $29.49 and fell quickly to a low of $28.975, down 8.7% on yesterday's close.

Let's see what the global building materials giant reported.

James Hardie share price tanks on falling sales

Here are key points for the three-month period ending 31 December 2022:

  • Net sales down 4% to US$860.8 million on the prior corresponding period (pcp) of Q3 FY22
  • Adjusted earnings before interest and taxes (EBIT) down 19% to US$165.4 million pcp
  • Adjusted EBIT margin of 19.2%, down from 22.7% pcp
  • Adjusted net income down 16% pcp to US$129.2 million

Given the housing downturns in the US and Asia-Pacific, it was a tough quarter for the company. The James Hardie share price fell by 14.4% over the three months to 31 December 2022.

However, if we look at the full fiscal year 2023, taking in the nine months to 31 December, net sales from ordinary activities are up 8% and the profit after tax attributable to shareholders is up 6%.

Additionally, the net tangible assets per share are up 35% to US$2.76.

What did management say?

James Hardie CEO Aaron Erter commented on the full fiscal year results:

Our team executed in the face of significant challenges to deliver strong financial results in fiscal year 2023.

The team's performance is reflected in strong Price/Mix growth in all three regions, including North America Price/Mix growth of +10%, Asia Pacific Price/Mix growth of +6% and Europe Price/Mix growth of +14%.

We are managing quickly and decisively to accelerate our competitive advantages through this market downturn and we view this time as an opportunity.

What's next?

Erter said the company had lowered costs by reducing staff and spending while continuing to "significantly invest in strategic growth initiatives".

He said:

Most importantly we remain aggressive, and we are laser focused on driving profitable volume share gain in every region and segment we do business in.

We are being agile and adaptive in responding to significant changes in market conditions, but we are also being thoughtful and focused on where we can accelerate our competitive advantages

FY23 guidance lowered

James Hardie has lowered its adjusted net income guidance for the full-year 2023 to a range of US$600 million to US$620 million. This is down from the previous guidance of US$650 million to US$710 million.

For comparison, the company reported an adjusted net income of US$620.7 million in FY22.

The FY23 guidance was lowered due to "lower than expected second half volume results in both North America and APAC and restructuring charges incurred in the second half", according to the company's statement.

James Hardie share price snapshot

On 29 December, the James Hardie share price hit a new 52-week low of $25.84. It has since rebounded by 12%. The S&P/ASX 200 Index (ASX: XJO) is up 7.6% in the year to date.

Motley Fool contributor Bronwyn Allen has positions in James Hardie Industries Plc. 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 Scott Phillips.

More on Earnings Results

Bank building with the word bank in gold.
Earnings Results

4 ASX 200 bank shares with earnings updates next week

Three of Australia's 'Big Four' banks plus a regional bank will report to the market next week.

Read more »

Mini house on a laptop.
REITs

2 ASX 300 property shares up big today

Investors seemed to like one earnings report more than the other.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Earnings Results

2 ASX All Ords shares soaring on strong full year results

These shares are making their shareholders smile on Friday. Let's find out why.

Read more »

Woman and man calculating a dividend yield.
Earnings Results

Why did the AMP share price just crash more than 13%?

AMP shares are taking a beating on Friday. But why?

Read more »

Three smiling corporate people examine a model of a new building complex.
Earnings Results

2 ASX 300 REITs charging higher on results day

These property companies have released their latest results. Here's what they reported.

Read more »

A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.
Earnings Results

Cochlear share price sinks 10% on half-year result disappointment

Let's see why investors are hitting the sell button this morning.

Read more »

A man in shirt and tie uses his mobile phone under water.
Share Market News

2 ASX 200 shares sinking on Thursday on earnings results

Investors are bidding down these ASX 200 shares today. But why?

Read more »

Man pointing at a blue rising share price graph.
Earnings Results

2 ASX 300 shares rocketing 6% today

Investors love what these two stocks just reported.

Read more »