“We were surprised. They were surprised,” he said.
“It’s a rapidly changing market out there.” The chief executive added that volumes were expected to be down by about 30 per cent in the United States for materials used in new home construction in the second half of the group’s financial year, which ends on March 31.
James Hardie now expects full-year adjusted net income to be between $US650 million ($1.01 billion) and $US710 million, down from a previous forecast of $US730 million to $US780 million.
It was the second downgrade in the past few months, with James Hardie having cut its full-year forecasts in mid-August.
Price and mix growth
The role of chief executive had been vacant at James Hardie for eight months after Jack Truong was dumped by the board over bullying allegations.
Mr Erter for the previous two years had been the chief executive of PLZ Corp, a manufacturer of aerosols and specialty liquids. Prior to that, he was a senior executive with paint maker Sherwin Williams. The Australian paint business Wattyl is part of the Sherwin Williams global stable.
Mr Erter said on Tuesday that in the September quarter, there had been price and mix growth of 11 per cent in the Asia-Pacific business, with price rises pushed through in September and October to try to claw back higher input costs.
Australia makes up a large proportion of that division. Labour shortages and wet weather in the country had been a partial handbrake on operations.
Mr Erter also announced that the company aimed to lift prices in North America by 5 per cent in January to try to offset some of the decline in volumes. He said Europe was effectively in a “housing recession” and earnings before interest and tax were likely to decline by about 43 per cent in the March half as people grappled with soaring energy costs.
He also revealed that James Hardie had overhauled its approach to capital management, and would embark on a $US200 million share buyback instead of paying a first half dividend. The profit downgrade overshadowed the first half results announced on Tuesday, where net profit after tax was up 22 per cent to US$330.5 million, with sales up 14 per cent to $US1.998 billion.
James Hardie has undergone a process of renewal at the top, with Anne Lloyd having taken over as chairwoman on November 4, after being deputy chairwoman.
Mr Erter said the renovations market was also expected to soften, with volumes likely to be “flattish” and the group wa cutting costs.
“We will continue to focus on what we can control,” he said.
(20min delay)