James Hardie is riding the North American building boom and has the revenue to prove it
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There’s no doubt there’s a building boom right now in the US, with the Biden administration investing big bucks to create and preserve more than 2 million sustainable homes as part of its Build Back Better Agenda.
And while there’s volatility in lumber market pricing, and supply chain issues (‘cos COVID), fibre cement manufacturing giant James Hardie (ASX:JHX) is targeting the US market for its Hardie Textured Panels – and the effort is paying off.
The company is going gangbusters. It just reported a staggering US$843.3 million in revenue for the first quarter of FY22, and as a result, the share price jumped 2.9%
It saw a 28% increase in North American revenue to US$577.1 million, compared to a 37% increase in Europe to a measly €103.3 million and 33% increase in Asia Pacific to A$184.1 million.
“Our North America business delivered record quarterly net sales and volume in the first quarter, with strong early momentum in the execution of our high value product mix strategy,” James Hardie CEO Dr Jack Truong said.
“With our commercial team partnering closely with our customers, our focus on creating demand by marketing directly to the homeowners, and the additional capacity provided by our ramp up of Prattville, we believe we are poised to continue to drive strong net sales growth and continue to gain market share throughout fiscal year 2022.”
Then there’s steel manufacturer BlueScope (ASX:BSL), up 2.19% on no news since it reported a record second half result and preliminary unaudited FY2021 underlying earnings before interest and tax (EBIT) of around $1.72 billion in late July.
But the company did say that since April, the two most significant contributors to performance have been a continued increase in US Midwest benchmark HRC steel prices. It surpassed prior expectations and favourably impacted realised spreads at North Star and the North America coated business.
Here’s a list of how ASX construction stocks are tracking – with and without a finger in the US market pie.
Interestingly, among the stocks that dropped was big brick manufacturer Brickworks (ASX:BKW), which is following in Hardie’s footsteps.
The company just announced plans to curtail operations at several facilities in New South Wales and Queensland after new outbreaks and restrictions resulted in construction pauses, and storage yards being at full capacity.
This unsurprisingly dented the share price a bit (-1.05), but Brickworks is already pivoting.
The company also announced plans to expand its distribution network with the acquisition of certain assets of Southfield Corporation – including the Illinois Brick Company (IBC) for US$51.1 million (AU$70.0 million).
Brickworks managing director Lindsay Partridge said the outlook for the region is strong, with building activity expected to increase over the next five years, across both residential and non-residential segments.
“Although the pandemic has hit our U.S. operations hard over the past year, with the vaccine program now well advanced, and the economy re-opening, we are seeing a strong recovery in demand,” he said.
“We continue to see the North American brick industry as a highly attractive long-term growth opportunity for Brickworks with a positive market outlook.”