By Simon Evans
Building products group James Hardie is increasing prices across its range of wall cladding, interior panels and outdoor decking to claw back a $140 million jump in costs since the outbreak of war in the Middle East, as it battles weaker housing and renovations markets.
The company, which generates about 80 per cent of its revenue from North America after the controversial $14 billion buyout of outdoor decking business Azek last year, warned that the new home construction market in the US was likely to shrink by 5 per cent over the next 12 months and renovation spending was tipped to fall by 2 per cent.
James Hardie chief executive Aaron Erter said builder confidence was low and consumer sentiment was weak as 30-year mortgage rates for home buyers in the US climbed above 6 per cent and inflation surged since the Middle East conflict flared up in late February.
In its first full-year set of results since the Azek buyout, James Hardie said net profit was down 75 per cent to $US104 million ($146.3 million) for the year to March 31, and the company would not be paying a dividend. That was despite revenue rising 25 per cent to $US4.83 billion.
Erter said the company had already started passing price rises on to customers to offset inflation in raw materials and freight costs that have emerged from the war and resulted in $US80 million to $US100 million in extra costs.
“From a pricing standpoint, we’re taking price to offset inflation and also to hold our margin,” Erter said. “Certainly the Middle East conflict has driven real input cost inflation across certain raw materials,” he said. The price rises ranged from about 3.5 per cent in its siding and trim business to bigger increases in other products.
There was some disquiet among investors over a build-up in inventory in Azek’s outdoor decking and railing operations because of softer sales in February and March, and over Azek pushing through price rises when its big rival Trex was not.
James Hardie said the higher inventory was largely due to high rainfall and storms in parts of the US that disrupted construction activity.
Shares in the building products company had already fallen around 12 per cent in the past month as investors braced for a soft result amid a weak US housing market. The stock slipped 1.6 per cent in early Wednesday trading on the ASX to $26.36.
James Hardie is trying to rebuild investor confidence after the $14 billion Azek purchase triggered a backlash from Australian shareholders who were denied an opportunity to vote on the transaction, despite concerns the company was overpaying.
Former chairwoman Anne Lloyd and two other directors were ousted at the October 2025 annual meeting as shareholders vented their frustration.
John Ayoub, portfolio manager at Wilson Asset Management, said it would take several years before the market could accurately assess the Azek purchase.
“Synergies are coming through and insulating the business from market headwinds. Ultimately, the strategic rationale and market share story will take a few years to play out,” he said. The company said it was ahead of schedule in pulling out US$125 million in cost synergies by the third year.
Citi analyst Samuel Seow said the US businesses had largely performed in line with expectations, with the weather disruptions in February and March causing a $US20 million hit which James Hardie had signalled as temporary.
“Given the soft share price into the result, and inherent conservatism built into the guide with macro concerns, we think this is a reasonable result,” he said.
The Australian and New Zealand operations, which make up 11 per cent of revenues, grew profit by 39 per cent to $US154 million through a combination of volume growth, price rises and savings from a more efficient manufacturing operation.
Nigel Stein replaced Lloyd as chairman and is refreshing the board. Former CSR chief executive Rob Sindel will join as a director from June 1.
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