James Hardie Industries N.V. (JHX) reported a first quarter net loss of US$77.9 million, down from a US$1.4 million profit a year ago. Net operating profit was US$41.6 million, up 4%.
The net operating result excludes asbestos, ASIC expenses and tax adjustments.
James Hardie’s bottom line was hit by unfavourable asbestos adjustments of US$119.8 million, solely attributable to the movement in the A$/US$ exchange rate.
Meanwhile, top line results continued to reflect weakness in housing construction activity in the US and general economic conditions.
Compared to last year, total sales for the first quarter decreased 22% to US$284.5 million, gross profit was down 11% to US$110.4 million and EBIT excluding asbestos and ASIC expenses was 3% lower at US$63.8 million.
For the full year, the company said its operating profit excluding asbestos was expected to come in at the top end of current analyst forecasts.
The market is tipping a profit of between US$39 million and US$67 million for the year ending 30 March 2010.
However, the company warned that conditions remained uncertain, adding that costs of some inputs, particularly pulp and energy, recently increased.
In addition, the company added that its bottom line would be impacted by its asbestos liability ASIC proceedings and income tax related issues.
James Hardie voiced cautious optimism regarding its key US market.
The building materials maker observed The US residential construction market is displaying initial signs that it is "nearing the bottom" of the cycle.
"House sales have improved, albeit off a very low base, largely due to the implementation of first-time home buyer tax credits and improvements in affordability," the company said.
"Looking forward, however, the US housing market is facing continuing challenges."
Among the challenges, the company highlighted the expiry of the first-time home buyer tax credit, tighter lending standards, a deteriorating employment market and excess supply of existing housing stock.
"These factors when combined will likely draw out any potential recovery phase of the cycle," the company cautioned.
James Hardie noted that in Australia, market forecasts are for a 14% drop in addressable housing starts in 2009-2010.
The company said that government efforts, including the stimulus plan and the first home owners grant would not drive improved demand for its products until the second half of its financial year.
Yesterday, James Hardie closed at $5.78.
