James Hardie shares lift off on $25 million cost saving initiatives

James Hardie Industries PLC (ASX: JHX) shares are charging higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) building materials company closed yesterday trading for $34.99. In morning trade on Friday, shares are changing hands for $35.70 apiece, up 2%.

For some context, the ASX 200 is down 0.1% at this same time.

This outperformance follows the release of an update on the company’s manufacturing optimisation plans.

Here’s what we know.

James Hardie shares lift on forecast cost savings

Before market open today, James Hardie announced some of the steps it is taking to optimise its manufacturing operations as part of its “commitment to operational excellence” through the Hardie Operating System.

Among the efficiency actions that could support James Hardie shares longer term, the company will close its manufacturing facilities in Fontana, California, and Summerville, South Carolina, within the next 60 days.

The soon-to-be shuttered sites represent around 6% of James Hardie’s year-to-date North American manufacturing volume. The company said this volume will be absorbed by its other facilities.

The company’s Fontana site’s Innovation and Research & Development functions will remain in operation.

Management expects the site closures and optimisation initiatives to realise cost savings of approximately $25 million a year beginning in Q1 FY 2027.

On the cost front, James Hardie shares could be facing some modest pushback amid the forecast $40 million to $44 million one-time pre-tax charges the company expects to incur in connection with its site closures and optimisation actions. Those costs will primarily be recognised in Q4 FY 2026 and split evenly between cash and non-cash items.

James Hardie reaffirmed the guidance for the full year of FY 2026 that it previously provided on November 18.

What did management say?

Commenting on the optimisation initiatives helping to boost James Hardie shares today, CEO Aaron Erter said, “During the past several years, James Hardie has made significant investments in modernising our manufacturing facilities to improve efficiency, support our material conversion opportunities, and to better serve our customers.”

Erter added:

Following a comprehensive review of our manufacturing network, we have decided to transfer more production volume to our modern, advanced plants. These actions will further improve our cost structure, increase productivity, and reinforce the Hardie Operating System, while ensuring we have the capacity needed to support our growth initiatives.

Addressing the impacted employees, Erter concluded, “We are grateful for their many contributions… The decision to close our plants in Fontana, California, and Summerville, South Carolina was not taken lightly.”

The post James Hardie shares lift off on $25 million cost saving initiatives appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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.