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SYDNEY - Building materials group James Hardie Industries NV today reported a 43 per cent rise in second-quarter operating profit, but lowered its full-year earnings guidance.
The latest outlook for operating profit of between US$206 million ($313.4 million) to US$237 million for the year to March 2007, excluding asbestos-related expenses, represents a drop of between 0.5 per cent and 4 per cent from a range of US$207-247 million given in August.
"Uncertainty surrounding the short- to medium-term strength of the US housing market remains at its highest level in recent years," the company said in a statement to the Australian Stock Exchange.
"In North America, a further softening in demand for new residential housing is expected in the short-term," it said.
Hardie, the top maker of fibre cement home siding, said operating profit, excluding asbestos-related costs, rose to US$68.3 million for the three months to September, from US$47.6 million a year ago and above an average analyst forecast of US$56.4 million.
US volume growth was likely to shrink further in the third quarter, but management expected to continue outperforming the market, partly by taking more market share from alternative materials.
"Input costs are expected to remain high in the short-term with the cost of raw materials, particularly pulp, at very high levels. Attractive margins are expected to be maintained in the short-term despite the higher costs," it said.
In Australia and New Zealand business, market conditions were expected to remain challenging and no near-term improvement was in sight.
"Further volume growth is expected due to initiatives to grow primary demand, but the average selling price is expected to remain under pressure due to price competition in Australia," it said.
In the first quarter, the company made an operating profit of US$62.7 million, up from US$55.9 million a year earlier.
Hardie's rivals in the United States include USG Corp and French giant Saint-Gobain's CertainTeed.
Hardie shares hit a five month high of A$8.50 ($9.90) last week after the company said a fund to compensate some Australians with asbestos-related personal injury claims was expected to be granted acceptable tax status.
- REUTERS
