James Hardie(US:JHX)2020-05-19 06:18Financial Data and Key Metrics Changes - The company reported a 7% volume increase in Q4, with North America leading at 10% growth. Adjusted EBIT grew by 21% in Q4, driven by a 26% increase in North America and a 4% increase in Asia-Pacific. Adjusted NOP increased by 17% for both the quarter and the full year. Operating cash flow surged by 48%, enhancing liquidity and financial flexibility [11][12][25]. Business Line Data and Key Metrics Changes - In North America, the exterior business saw an 11% volume growth in Q4 and 9% for the full year. The interiors business improved with a 5% volume growth in Q4 and 1% for the full year. The EBIT margin for North America reached 25.9%, exceeding long-term targets [13][15][16]. - In Europe, Q4 revenue grew by 7%, with fiber cement business revenue increasing by 50%. However, EBIT growth was hindered by higher integration and SG&A costs [17][18]. - In the Asia-Pacific region, EBIT growth was impacted by lockdowns, resulting in a 4% growth in Q4 and 2% for the full year, with an EBIT margin of 22.7% [19][21]. Market Data and Key Metrics Changes - North America showed strong performance across all key financial metrics, while Europe experienced a recovery in commercial execution with significant growth in fiber cement. The Australian business maintained growth despite market pressures [11][17][19]. Company Strategy and Development Direction - The company aims to maintain a safe work environment, ensure strong liquidity, and gain market share through a push-pull strategy. The focus is on continuous improvement and innovation to meet customer needs [51][53][61]. - Strategic actions include closing underperforming plants and exiting non-core businesses to enhance operational efficiency and financial flexibility [29][31][33]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the COVID-19 crisis while maintaining business continuity. They anticipate a gradual recovery in the housing market, with a focus on customer engagement and market share growth [9][58][80]. - The company expects to achieve EBIT accretion of $20 million to $30 million in FY '21 from recent strategic actions, with increasing benefits expected throughout the year [35][41]. Other Important Information - The company suspended dividends and reduced capital expenditures for FY '21 to focus on safety, maintenance, and innovation [27][45]. - Liquidity improved significantly, reaching $579 million by the end of April 2020, with a leverage ratio of 1.9, well below the covenant requirement [47][48]. Q&A Session Summary Question: What factors influence the North American margin range? - The top end is driven by efficiency and continuous improvement, while the bottom end depends on volume, which is volatile [68][69]. Question: What is the market growth and PDG contribution? - The focus is on gaining market share rather than predicting market growth, with improvements noted in recent weeks [70][72]. Question: What are the strategic actions in different regions? - North America focuses on leveraging product offerings, Europe on fiber cement growth, and Australia on lightweight construction trends [76][78]. Question: What is the expected recovery shape? - A cautious approach is taken, anticipating a gradual recovery influenced by economic factors and employment rates [80][81]. Question: What are the lean savings targets? - The company aims to maintain and improve upon previous lean savings, with a target of $40 million to $45 million for FY '21 [96][98].