James Hardie Report
James Hardie Industries Plc, an industrial building materials company listed on the Australian Stock Exchange (ASX) since 2001, mainly focused on the fibre cement products, which include the development and production of new technologies, materials and procedures for the production of building materials.
Today, on May 21, 2019, James Hardie announced the report of its fourth quarter of FY 2019 and the full-year result ended on March 31, 2019.
Based on the announcement, the company net profit has experienced a remarkable increase from US$146.1 million in 2018 financial year to US$228.8 million in 2019 financial year, which is a 57% increase. The Group’s adjusted EBIT margin for the quarter was US$100 million and US$404.6 million for the whole year, which respectively a decrease of 3% and a growth of 2% compared with the previous year. The Group’s net sales for the quarter were $624.8 million and the net annual amount was $2506.6 million which is an increase of 19% and 22%, respectively, compared to the previous corresponding period.
Considering the financial performance of the company different operating segments, the company’s North American (NA) fibre cement segment increased by 1% this quarter and grew about 3% for the full year; the NA fibre cement quarter EBIT that excluding product line discontinuation expenses were 22.5% and 23.1% for the full year.
The EBIT margin of the Asia Pacific Fiber Cement segment for the quarter was 20.0% and 22.3% for the year. The adjusted EBIT margin for the European Construction Products segment does not include costs associated with the takeover of 11.3% and 10.6% for the full year.
Even though the Australian property market still weakens, the company has acquired Europe’s Fermacell and increased on its net sales in its North American fibre cement sector. The company revenue and financial performance have improved in FY 2019.
James Hardie also announces that the FY 2019 second-half dividend of US 26 cents per security, which is a decrease from US 30 cents per share in FY 2018.
One of the possible reasons for this decrease decision would be its remarkable increase on FY 2019, which the company saw at the beginning of its further development; the company chooses to reduce its dividend payment in order to increase its retained earnings for future investment. This would indirectly increase company growth opportunities. Nevertheless, a decrease in dividend is always associated with a decline in the company share price, as it is an indication of the company weaker gains or limited funds available to pay dividend payments. However, considering its strong performance in FY 2019, this reason may not be possible.
Overall, as the good performance is shown in its FY 2019 result, James Hardie’s share price may continually increase, but this increase could possible hurdle by the dividend reduction.
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