James Hardie sells European business, launches share buyback

The James Hardie Industries plc (ASX: JHX) share price is in focus today after the company announced the divestiture of its European operations, including the sale of Fermacell to Holcim for €840 million (around $980 million USD).

The deal is expected to speed up debt reduction and support the return of capital to shareholders, with a new $250 million share repurchase program also unveiled.

What did James Hardie report?

• Firm has agreed to sell its European sustainable walling and flooring business Fermacell to Holcim for €840 million in cash.
• Proceeds will be used to repay about $600 million in debt and to fund a $250 million share buyback.
• The transaction is expected to be accretive to the company’s margin profile and return on invested capital (ROIC) post-completion.
• James Hardie also plans to close its European fiber cement operations, sharpening focus on its core growth markets.
• The deal is targeted to close in the first half of calendar 2027, subject to regulatory and employee procedures.

What else do investors need to know?

James Hardie’s strategic shift is part of a broader plan to align its portfolio with long-term growth opportunities and market leadership in core regions. The funds from the Fermacell sale will reduce James Hardie’s net leverage toward a target of below 2.0x by September 2027.

Additionally, the Board’s $250 million share buyback authorisation demonstrates a commitment to delivering shareholder returns. The closure of the European fiber cement business, while significant, also signals a more focused approach to investment and innovation in key growth markets such as North America and Asia-Pacific.

What did James Hardie management say?

James Hardie’s CEO, Aaron Erter, commented:

The strategic divestiture of our European operations and the intended closure of the European fiber cement business will enable us to focus on our highest growth and return opportunities. We believe this divestiture will strengthen our balance sheet, deliver compelling value for our shareholders and position the Fermacell business for long-term success under Holcim’s ownership. We are deeply grateful to our talented team members across Europe, whose expertise and hard work have made meaningful contributions to James Hardie, and we are committed to supporting impacted European fiber cement employees.

What’s next for James Hardie?

James Hardie expects the transaction to be completed in the first half of 2027, pending usual closing conditions. The focus post-sale will be on reducing debt further and potentially more capital management initiatives, including share buybacks.

The divestment and business closure will allow James Hardie to direct resources toward markets and segments with the most potential for sustainable growth and improved returns. Management has indicated a continued appetite for innovation and investment in these core markets.

James Hardie share price snapshot

It has been a strong 12 months for the James Hardie share price. During this time, the company’s shares have outperformed the S&P/ASX 200 index (ASX: XJO) with a gain of almost 50%.

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The post James Hardie sells European business, launches share buyback appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.