The Australian building products maker, dogged by a row over asbestos liabilities, said it expected strong US sales growth to continue in the coming year although the rate of growth would slow and the Australian housing market would remain soft.
Cheered by a 34 per cent rise in fourth-quarter US fibre cement sales and its best-ever margins of 31.2 per cent, investors pushed up shares in James Hardie, whose rivals include USG Corporation and CSR Ltd, to a three-month high of $A6.44 ($NZ6.96).
"It just underscores that their market penetration in the US is marching ahead at a rate of knots, that the housing environment is still very buoyant and it puts a positive light on their ongoing capital expenditure and plant expansion in the US," said UBS analyst Mark Ebbinghaus.
Chief executive Louis Gries described the outlook for the US housing market as "flat to slightly down". He said US sales growth would be strong in fiscal 2006, albeit below the 27 per cent growth rate of 2004/05.
Hardie also released an updated valuation of its asbestos-related disease liabilities by KPMG Actuaries, which said net liabilities at March, 2005 were $A1.685 billion, up from its estimate a year earlier of $A1.536 billion. The company agreed last December to pay $A1.5 billion to victims of asbestos-related diseases, with annual payments to be capped at 35 per cent of net operating cash flow until 2012.