James Hardie Shares Sink 30% After Warning on US Housing Demand

(Bloomberg) -- James Hardie Industries Plc shares tumbled the most in five years after the Australian building materials maker cautioned that economic uncertainty is dragging on the US housing market.

The stock fell as much as 30%, the most since March 2020, after the company posted a quarterly profit decline and said demand for both repairs and new construction in North America remains challenging. The firm reported adjusted net operating profit of $126.9 million for the three months ending June, a 29% year-on-year drop, according to an exchange statement Wednesday.

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“Uncertainty is a common thread throughout conversations with customer and contractor partners,” said Chief Executive Officer Aaron Erter in the statement. Homeowners are deferring large-ticket remodeling projects, and affordability remains the key impediment to improvement in single-family new construction, he added.

Difficult economic conditions continue to weigh on American homebuyers, with the real estate market recently recording its slowest spring selling season in more than a dozen years. US luxury builder Toll Brothers Inc. on Tuesday also reported quarterly orders that missed analysts’ estimates.

Net sales in James Hardie’s North American fiber cement business decreased 12% during the quarter. Some of its key markets like Texas, Florida and Georgia have been impacted by affordability issues and elevated housing inventory, the firm said. It gets about 70% of its revenue from North America, according to data compiled by Bloomberg.

James Hardie’s stock has come under pressure this year after the company’s $8.75 billion acquisition of home-decking provider AZEK Co. in March. The purchase of the Chicago-based firm placed a larger bet on the US housing market, essentially relying on American consumers in a precarious investment climate.

(Updates with additional detail throughout)

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