James Hardie (ASX:JHX) share price on watch after strong Q4 result

The James Hardie Industries plc (ASX: JHX) share price will be on watch on Tuesday.

This follows the release of the building materials company’s fourth quarter update this morning.

How did James Hardie perform in the fourth quarter?

James Hardie finished FY 2021 in fine form, reporting strong sales and profit growth during the fourth quarter.

For the three months ended 31 March, the company reported a 20% increase in sales to US$807 million and a 44% jump in adjusted net income to US$124.9 million.

This led to its full year sales coming in 12% higher year on year at US$2,908.7 million, with adjusted net income rising 30% to US$458 million.

Growing even quicker was its operating cash flow, which rose 74% year on year to US$786.9 million for the 12 months.

What were the drivers of its growth?

All of the company’s businesses performed positively in the fourth quarter.

North America Fiber Cement segment sales increased 17% to US$555.3 million and adjusted EBIT rose 27% to US$152.9 million.

Whereas its Europe Building Products segment delivered a 12% lift in sales to 104.6 million euros and EBIT of 15.7 million euros.

Finally, the Asia Pacific Fiber Cement business delivered an 11% increase in sales to A$162.6 million and a 46% jump in EBIT to A$43.7 million.

Management commentary

James Hardie’s CEO, Dr. Jack Truong, commented: “I am proud of our globally integrated team’s ability to close out the fiscal year with a fourth quarter of exceptionally strong results. We have now delivered eight consecutive quarters of consistent profitable growth, including record financial results each of the past three quarters.”

“Our performance in fiscal year 2021 marked a significant step change across multiple facets of our Global Company that allowed us to deliver this consistent profitable growth on an expanding global scale. Over the past twelve months, we were able to accelerate our strategy: (i) to unlock capacity and increase efficiency in our global manufacturing network through LEAN initiatives, and (ii) to better integrate our supply chain with our customers, which collectively drove consistent market share gains in all three regions.”

Outlook

Management advised that the company is experiencing strong growth momentum in its businesses across all three regions. It also notes that residential and market growth in the USA is expected to continue.

In light of this, it expects FY 2022 adjusted net income to be between US$520 million and US$570 million. This will be a year on year increase of approximately 13.5% to 24.5%.

Furthermore, the company revealed that it is aiming to increase its margins and has provided the market with EBIT margin targets for each operating segment.

It is aiming to increase its North American EBIT margin to 25% in FY 2022 and then 30% in FY 2024. Whereas it is targeting Asia Pacific EBIT margins of 25% and then 30% and European EBIT margin expansion to 11% and then 16% over the same period.

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Motley Fool contributor James Mickleboro 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 Bruce Jackson.

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