James Hardie Industries PLC (ASX: JHX) shares are in the spotlight once again this week after the business released its FY 2025 results on Wednesday.
The company reported a 9% drop in annual profit, weighed by a weaker performance in its Asia Pacific segment and a small dip in its North American segment's net sales.
Annual net sales dropped 1% as weaker volumes in North America and Asia Pacific were outweighed by gains from higher average selling prices across its three regions.
The news saw an immediate 6% drop in its share price.
Later, at the close on Thursday, James Hardie shares fell 0.11% to $36.07 continuing the steep decline seen over the past 3 months. The price has dropped 30% since March, when the market value was around $51 per share.
In a note Monday, ahead of this week's results, Macquarie Group Ltd (ASX: MQG) maintained a hold rating on James Hardie shares, valuing the business at $40.20 per share.
Now that the fibre cement maker has released its earnings result, investors are probably keen to find out if the broker has shifted its view.
Macquarie's new stance on James Hardie shares
On Wednesday, following James Hardie's results, Macquarie said it maintains its neutral stance on the stock, but has lowered its 12-month target price to $39.80 (down from $40.20 earlier this week).
The broker noted that market conditions need to turn sustainably more positive, especially with higher leverage in the offing.
The broker said:
Market conditions are softening again – with confidence under pressure and US mortgage rates very close to 7% again…this weighed on outlook commentary, and, consequently, we believe the stock will remain pressured until conditions ease.
James Hardie FY 2025 results – what Macquarie liked
Macquarie was impressed that James Hardie's results met guidance.
The group marginally beat its guided NPAT outcome for FY25 and seems to be making reasonable progress in efficiency and cost-out gains. JHX has signed contracts with a number of major builders, which appear to be underpinning confidence in future share gains.
JHX delivered US$644m underlying NPAT, above the US$635m+ guide and a touch below our US$646.4m (Visible Alpha consensus: US$643.6m).
The broker also liked the EU sector of the business.
Europe EBIT of US$13.3m was better than our US$10.7m, with volume +7% and ASP (in EUR) +7% — a solid outcome.
James Hardie FY 2025 results – what Macquarie "liked less"
Soft markets and a soft outlook remain a concern for the broker.
JHX notes heightened macroeconomic uncertainty has weighed on consumer sentiment and impacted demand. The group expects NAM market volume to decline in FY26 but with market share gains (and price) to result in LSD net sales growth and a stable EBITDA margin (of ~35%)…This is a material departure from planning assumptions in late-March, associated with the AZEK offer.
The low capital expenditure (CAPEX) guide is also lower in favour. James Hardie lowered its FY 2026 CAPEX guide to US$325 million, from US$600 million.
We are surprised by this. Prattville #3 and #4 are complete, with #4 awaiting start-up pending market conditions. We did expect JHX to roll into Cleburne spend during FY26E.
While appreciating softer market conditions, Macquarie said it worries about the risk of capacity shortfalls.
The broker also pointed to softer net achieved margin (NAM) as something it wasn't happy to see.
Operational performances in NAM and APAC were weaker than we expected. In NAM, the small exposures to multi-family and interiors materially affected volume and ASP outcomes, weighing on the result.
