JAMES HARDIE INDUSTRIES SE (NYSE:JHX) Q4 2018 Earnings Conference Call May 21, 2018 8:00 PM ET Executives
Louis Gries -
& Executive Director
Matthew Marsh - CFO & EVP, Corporate Analysts
Andrew Scott - Morgan Stanley
Peter Steyn - Macquarie Research
Simon Thackray - Citigroup
Keith Chau - Evans & Partners
Lee Power - Deutsche Bank
Sophie Spartalis - BofA Merrill Lynch
Peter Wilson - Credit Suisse
George Clapham - Arnhem Investment Management
Brook Campbell-Crawford - JP Morgan Chase & Co Louis Gries
Okay. Good morning. Thanks for joining the result. We are going to do it like we always do it. I will cover the business overviews and Matt will cover kind of all the financials in details behind that. We will start then on Slide 7.
Yes, the result was good right across the board. I think it's a little bumpy at the start of the year, we will get into that. In North America, the only thing really worth going out is understanding how we got to where we got in volume, but our financials look pretty good at least from our perspective.
In North America, price was solid right through the year, so we had that increase a year-ago April. Everything stuck tactically. The guys in the U.S have been doing better. So, not a lot of leakage in our price. Obviously, we are in a win back situation on some volume loss when we are capacity constraint, so we handle that well without using a lot of price to get there.
The EBIT got better as the year went through, and that was all driven by manufacturing, so we talked about. Then you'll see a slide in a little bit, but manufacturing traction has been good, and also on the market side attraction is good. So how did we get 1% volume in the fourth quarter? I think when we talked early in the year, we acknowledged that having customers move over to other brands while we were out was a bit of a -- was creating a bit of a lag on our -- on the market side. All those customers weren't just automatically coming back once we got our capacity in place.
So we were -- I think we had a below index count for the year, okay? Now we did two different things. One is exterior, one is interior. Let me get interiors off the table, so we understand that. When capacity was tight just like any company, we looked at kind of where our profitability was with our different product lines and channels with interiors. And we did exit some -- we didn't participate as broadly as we had a year before, so that was a bit of the reduction in interior volume, so we got out of the gypsum channel and we got out 4 by 8 G2 backer.
In addition to that, we just lost traction for a period of time with interiors, and it's important that we are in a process of fixing that and I think that won't be an issue for us going forward this year, and all the products and all the segments we are servicing now we like in interiors, so there will be no more pulling back from any positions we have. So in the fourth quarter, interiors was down about 8%. So that was a lot of the lack of volume growth.
Exteriors, I think we kind of in the previous Q&A, I talked about we thought we would work our way back to market index by year-end and we would be positive against the market index in fiscal year '19, and I think I gave the range 3 to 5. And basically both those things have played out, so in the third and fourth quarters, basically we are at market index as far as our volume growth and exteriors, and our order fall right now looks pretty good and we're pretty optimistic that we are starting the year in positive market index in a range.
So that was the main story. The U.S business runs really well now. I mean, certainly there's a lot of upside, but the issues we'd had when we ran out of -- that were caused by us running out of capacity, they are pretty much all been addressed, and the organization has responded, and like I said there's still upside, but traction is there. This goes into delivered unit cost. You would remember in the past, we talked about we woke up one day and decided we were underspending on basic maintenance in our plants that would have been in parts of fiscal year '16 and early fiscal year '17. So that's -- you see the low bars in Q1’17 and Q2 '17.
JHX Price at posting:
$22.93 Sentiment: None Disclosure: Held
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(20min delay)