James Hardie has reported a full year loss of $US506.7 million, after accounting for future estimated future asbestos-related compensation payments of $US715.6 million.
The asbestos provision contributed to a decrease in operating profit from continuing operations for the three months ended March 31 2006, down from $US46.3 million in fiscal year 2005 to a loss of $US650.9 million.
For the full year, the operating profit from continuing operations fell from $US127.9 million in fiscal year 2005 to a loss of $US506.7 million.
The fourth quarter and full year results also include Special Commission of Inquiry and other related expenses of $US2.7 million and $US17.4 million.
The company said the recording of the asbestos provision is in accordance with US accounting standards because it is probable that the company will make payments to fund asbestos-related claims on a long-term basis.
For the fourth quarter, operating profit from continuing operations, excluding the asbestos provision of $US715.6 million, increased 40% compared to the same quarter last year, to $US64.7 million.
The strong fourth quarter operating performance lifted the full year operating profit from continuing operations, excluding the asbestos provision, by 63% to $US208.9 million.
James Hardie’s chief executive Louis Gries, said operationally, the strong 4th quarter growth performance capped off an outstanding year for the company.
James Hardie said continued strong growth in the fourth quarter led to net sales for the year increasing 23% compared to last year, to $US1,488.5 million.
“Our US business exceeded its targets once again and it remains on track to meet its longer-term targets,” he added.
USA Fibre Cement continued its strong growth momentum, with net sales up 32% for the quarter. However, higher costs during the quarter, including a lift in spending on growth initiatives, affected the bottom line with EBIT increasing 7%.
“Despite expectations that the robust new housing construction market would ‘cool’ to more sustainable levels, unseasonably good weather helped buoy both the new housing and the repair and remodel segments and activity levels remained very strong during the quarter.
“We expect housing activity in North America to slow over the remainder of the calendar year, but still be at very solid levels. We have a track record of penetrating our target markets and are growing much faster than the market itself, and we expect this to continue,” Gries said.
Market conditions during the fourth quarter were weak in the Asia Pacific Fibre Cement businesses.
The Australia and New Zealand consolidated business increased sales 6% in Australian dollars, while the Philippines remained EBIT positive.
“The new housing and renovation markets softened further during the quarter, but the business increased sales volumes through market initiatives designed to grow primary demand for its products and by providing more value-added differentiated products,” Gries said.
The company declared a final dividend of US 4.0 cents a share, which brings the total dividend for the year to US 8.0 cents, an increase of US 2.0 cents over last year’s dividend.
James Hardie shares closed 4.98% or 0.45 cents lower at $8.59.
By Adam Parsons
