James Hardie shares tumble as net profit falls 17%, outlook dims on tariff risks

James Hardie Industries plc shares dropped on Wednesday after the building materials manufacturer posted a 17% decline in annual net profit, with cautious guidance adding to investor unease over its proposed $14 billion takeover of US-based AZEK Company.

The company reported net profit attributable to shareholders of US$424 million for the 2025 financial year, down from US$510.2 million the prior year, while revenue slipped 1% to US$3.88 billion. James Hardie’s share price was down 5.25% to $36.50 in Wednesday trading as of 4 pm AEST.

Macro challenges loom large

While fourth-quarter earnings met internal targets, James Hardie struck a cautious tone heading into the 2026 financial year. It forecast low single-digit organic sales and adjusted underlying earnings (EBITDA) growth across all regions but acknowledged that market volumes in North America – the company’s largest segment – were likely to contract for a fourth consecutive year.

CEO Aaron Erter said broader macroeconomic conditions, including persistent cost pressures and weaker demand for large-ticket renovations, were likely to persist. He also flagged the risk of new US tariffs on building materials, calling it a potential drag on consumer sentiment and construction activity.

“Despite these near-term headwinds, our brand and the attractiveness of our value proposition to customers has and will enable James Hardie to structurally grow through expansions and contractions,” Erter said.

“We will continue to navigate through the current backdrop, focusing on outperforming our end markets to drive top and bottom line in FY26, consistent with our prior planning assumptions.”

AZEK merger adds to market unease

The earnings update came just weeks after James Hardie unveiled a US$14 billion acquisition of US rival AZEK, a deal it says will accelerate growth and generate US$500 million in commercial synergies over five years.

The proposal has drawn strong criticism from Australian institutional investors and governance advisers, who argue the deal is excessively priced and strategically unclear. The ASX has also faced scrutiny for granting the company a waiver to proceed without a shareholder vote.

While James Hardie maintains that the deal will be accretive and allow for margin expansion, investors have wiped more than 15% off the company’s share price since the announcement in March.

Segment performance highlights regional divergence

North America remained James Hardie’s primary profit driver in the 2025 financial year, with an EBITDA margin of 27.8% and adjusted EBITDA of US$1.1 billion for the year. Performance in the Asia Pacific region was weaker due to lower volumes, particularly following the closure of the company’s Philippines operations. Europe saw modest growth in high-value products but continued to face cost pressures and a subdued housing market in Germany.

Looking ahead, James Hardie plans to reduce capital expenditure in the next financial year to about US$325 million, down from US$422 million last year. It expects free cash flow to grow 30% to top US$500 million, supported by improved working capital management and the completion of major capacity projects in North America.

“Across our businesses, we remain committed to outperforming the markets in which we participate and have purposeful strategies that we deliver on these commitments year in and year out,” Erter said.

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}