James Hardie shares sink as investors face another setback

James Hardie Industries Plc (ASX: JHX) has given investors another reason to pause after a rough 12 months for the stock.

The building products giant is back in the red on Tuesday, with its shares down 2.24% to $31.37 at the time of writing.

Today’s weakness comes after a better few weeks for the stock.

James Hardie shares have climbed around 10% over the past month, giving shareholders some relief after a difficult stretch.

But the rebound hasn’t gone close to repairing the damage from the past year.

The stock is still down around 22% over 12 months, and today’s announcement has put another issue back in front of investors.

Let’s take a closer look.

James Hardie responds to class action

In a statement to the ASX, James Hardie said it has been served with a group proceeding filed in the Supreme Court of Victoria.

James Hardie said the proceeding includes allegations that it breached the Corporations Act, the ASIC Act, and Australian Consumer Law.

The claim also includes allegations relating to continuous disclosure obligations and statements made about expected financial performance.

But the company has pushed back strongly.

James Hardie said it considers that it has complied with its disclosure obligations at all times.

It also said it denies any liability and will “vigorously defend” the proceedings.

Still, the company’s denial has not stopped investors from selling the stock today.

Why investors are watching this closely

The class action follows a difficult period for James Hardie shareholders last year.

The company’s shares dropped 34% across 2 days after its first-quarter results and downgrade to full-year guidance.

The stock fell from $44.34 to $28.98 after the update.

At the time, James Hardie reported a 29% fall in adjusted net profit to US$126.9 million for the June quarter.

That result was around 20% below expectations, with weak North American fibre cement sales putting pressure on the numbers.

The class action will look at whether investors were properly informed about adverse conditions affecting that North American fibre cement business before the downgrade.

Those issues included customer destocking, inventory management problems, and softer demand.

It will also consider whether James Hardie should have corrected or withdrawn its FY26 earnings guidance earlier.

Foolish Takeaway

James Hardie has made it clear it will fight the class action.

But investors are dealing with another uncertainty after a difficult year for the stock.

The stock had bounced over the past month, but today’s fall shows the market is still sensitive to bad news.

The next test is whether James Hardie can improve its operating performance while this legal process plays out in the background.

The post James Hardie shares sink as investors face another setback appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.