James Hardie Industries NV (JHX) posted a six-fold increase in its net operating profit to US$111 million, from US$17.1 million for the three months to 31 December 2008. However, the building products supplier warned that a negative remained as the global financial crisis continued to impact demand for new houses.
The company reported underlying profit down 56% for the third quarter, from US$37.8 million to US$16.5 million.
James Hardie explained its jump in operating profit was due to favourable adjustments on its asbestos liability, which had been affected by the recent depreciation of the Australian dollar as compared to the United States dollar.
CEO Louis Gries said that housing starts in December 2008 numbered 550,000, down 45% from the previous year.
"We expect market demand will continue to be significantly down, and remain focused on staying ahead of any future declines by actively managing inventory and adjusting output to demand," he said.
"Despite the difficult operating environment we are also continuing to fund key market and product initiatives which we believe will strengthen the company in both the short and long term."
Looking ahead to the full-year ended March 2009, the company reiterated consensus forecasts for operating profit, excluding asbestos provisions of between US$91 million and US$110 million.
"On this basis, excluding asbestos, ASIC expenses and tax adjustments from net operating profit, management is comfortable with the middle of the range noted," the company said.
James Hardie reported a half year net profit, excluding asbestos, ASIC expenses, asset impairments and tax adjustments of US$89.7 million for the three quarters to 31 December 2008. This was a 43% decline from the prior period’s profit of US$156.8 million the company said.
Including asbestos, ASIC expenses, asset impairments and tax adjustments the company reported a net profit attributable to shareholders of US$265 million, up 253% from the previous corresponding period.
For the nine months to 31 December the company's operating cash flow decreased from US$279.4 million in the corresponding period to US$25.2 million.
This drop was due primarily to the ATO settlement payment of US$101 million and a further US$50 million quarterly instalment payments to the Asbestos Injuries Compensation Fund (AICF), James Hardie explained.
The company said it also continued to incur legal costs for civil proceedings. For the nine months to 31 December this totalled US$12.3 million the company reported.
The company said it would not pay an interim dividend.
At 1023 AEDT James Hardie shares were up 22c to $3.51.
