(Reuters) -Fiber cement maker James Hardie forecast full-year underlying earnings below estimates on Wednesday, as elevated borrowing costs in the U.S. and tariffs dampen housing market activity and
James Hardie shares drop 30% as weak US housing muddies earnings view
Impact of US Housing Market on James Hardie
By Shivangi Lahiri
Earnings Forecast and Market Reaction
(Reuters) -James Hardie issued a bleak warning for its North America business and forecast 2026 earnings below market view on Wednesday, as cash-strapped U.S. homeowners put off any high-ticket renovation projects.
Challenges in North American Construction
Sydney-listed shares of the fiber cement maker crashed 30% in early trade to A$31.07, marking their biggest intraday decline on record. By noon in Sydney, James Hardie had lost roughly A$6.86 billion ($4.41 billion) in value.
Sales Performance and Future Outlook
The company also cautioned that homebuilders were recalibrating their product inventory in line with the slowing demand for construction and remodelling projects, pushing its expectations for a market recovery into the next business year.
"Homeowners are deferring large-ticket remodeling projects like re-siding, and affordability remains the key impediment to improvement in single-family new construction," CEO Aaron Erter said in an exchange filing.
"Over the course of the summer, single-family new construction activity has been weaker than anticipated and we have adjusted our expectations to account for softer demand."
As a result, James Hardie forecast adjusted operating earnings between $1.05 billion and $1.15 billion for the fiscal year ending in March 2026, below the Visible Alpha consensus of $1.23 billion. It earned $1.1 billion in fiscal 2025.
"The selloff reflects a big miss against consensus and a guidance downgrade," said Lochlan Halloway, an equity market strategist at Morningstar.
"The market was already aware of housing weakness, but it looks like the trough is now deeper and more prolonged than originally feared."
Sales of new single-family homes in the United States increased less than expected in June after slumping to a seven-month low the previous month, as higher interest rates dampen demand and housing inventory has risen to its highest since October 2007.
"Demand in both repair and remodel and new construction in North America is challenging," CEO Erter said.
James Hardie's fiber cement sales in North America, its biggest revenue generating region, declined 12% to $641.8 million in the quarter ended June 30.
As a result, the Dublin-headquartered firm's adjusted net income fell to $126.9 million in the first quarter from $177.6 million last year, missing the Visible Alpha estimate of $158.5 million.
James Hardie, which completed its $8.8 billion acquisition of U.S. artificial decking maker AZEK on July 1, expects to benefit from new supply agreements and product launches mainly in fiscal 2027 and beyond, rather than in the second half of FY26 as previously anticipated.
($1 = 1.5547 Australian dollars)
(Reporting by Shivangi Lahiri and Sneha Kumar in Bengaluru; Additional reporting by Sameer Manekar; Editing by Maju Samuel and Sherry Jacob-Phillips)
