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James Hardie Posts 32% Fall in Second-Quarter Profit

Reuters
Sunday, 18 Nov 2007 | 7:37 PM ET

Building materials maker James Hardie Industries reported a 32 percent fall in second-quarter profit, hit by a drop in home building in the United States, and said it was comfortable with the
bottom end of analysts' full-year forecasts.

Hardie, which makes about 80 percent of its sales in the United States, said further weaknesses were expected in North American residential construction until at least the end of the financial year, but added the company was well-positioned to deal with weaker market conditions.

"There is still a large backlog of new houses for sale and indicators of future activity such as housing permits and builder confidence all suggest that a recovery is not likely in the near-term," Hardie said in a statement on Monday.

"The business is now being set on the basis that new housing starts will be at an annual rate of 1.1 million, down from the earlier assumption of 1.3 million starts."

Hardie last month shut one of its U.S. fibre cement plants to cope with a sharper than expected downturn in demand.

Operating profit after tax excluding asbestos-related costs fell to US$46.5 million for the three months to September from $68.3 million a year earlier.

Four analysts on average had expected a second-quarter profit of $49.6 million. The company said it was comfortable with the bottom end of the range of analysts' forecasts for operating profit from continuing operations, excluding asbestos and plant impairment costs, of between $181 million and $207 million.

Hardie's shares have fallen 34 percent so far this year, compared with U.S. rival USG Corp, down 31 percent, and and Australian rival Boral, which has fallen 13 percent.

Hardie was once Australia's top maker of asbestos products. After several years of negotiations, earlier this year it made the first payment of A$184 million for a compensation package for victims of asbestos-related diseases.

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