James Hardie Industries will attempt to push through a hefty January price rise for its building products in the US, in a bid to boost profits and offset its asbestos liability costs reports the Sydney Morning Herald. After reaching an in-principle agreement last week to pay $1.5 billion in compensation to asbestos victims over the next 70 years, James Hardie will now move to raise the prices of its US fibre cement products by up to 10 per cent.
Shares in the fibre cement maker ended last week 52c or 8.7 per cent higher at $6.65, as investors expressed relief that Hardie had agreed to divert 35 per cent of its cash flows to victims, while still protecting the bulk of its expansion plans in the US. Hardie will still have enough capital to build one plant a year to continue its push into the US.
After reporting a 24 per cent slump in second-quarter net profits to $US24.8m (A$32.4m) last month, Hardie told analysts at a briefing in Orlando, Florida this month that it would push for an average six per cent price increase for its products next month. This comes on top of the company’s strategy to draw customers to more expensive products, one being its pre-painted fibre cement siding ColorPlus, which was introduced in early 2002. Hardie has already managed to boost the average selling price of its products by 24 per cent since 1999.
Hardie meanwhile has attempted to put its recent poor second-quarter profit slump behind it, which it blamed on higher raw material and freight costs associated with operational problems at three of its US plants. At the Orlando briefing, Hardie reiterated its plans to increase its share of the US exterior siding market from 12 to 35 per cent.