The James Hardie Industries plc (ASX: JHX) share price is up more than 1% after the business announced closure of some US manufacturing operations.
James Hardie describes itself as the industry leader in exterior home and outdoor living solutions, which includes fibre cement, fibre gypsum and composite & PVC decking and railing products. Its brands incldue Hardie, TimberTech, AZEK Exteriors, Versatex, fermacell and StruXure. It has a presence in North America, Europe, Australia and New Zealand.
Closure of US manufacturing operations
The company said that it’s taking steps to optimise its manufacturing footprint.
Its manufacturing facilities in Fontana (California) and Summerville (South Carolina) will close within the next 60 days.
Those sites’ manufacturing operations – which represent approximately 6% of the company’s year-to-date North American volume, will be absorbed by other facilities.
But, the Fontana site’s innovation and research & development functions will remain in operation.
These closures are expected to generate annualised cost savings of approximately $25 million, starting in the first quarter of FY27.
The cost savings will be driven by reduced fixed costs and improved utilisation across the remaining manufacturing network, as well as incremental cost synergy savings with the AZEK acquisition.
But, this will come as a one-off charge of between $40 million to $44 million. These charges relate mainly to employee severance, benefits and transition-related costs, contract termination, facility exit costs, as well as asset impairments and other charges.
Management commentary
The James Hardie CEO Aaron Erter said:
During the past several years, James Hardie has made significant investments in modernizing our manufacturing facilities to improve efficiency, support our material conversion opportunities, and to better serve our customers. Following a comprehensive review of our manufacturing network, we have decided to transfer more production volume to our modern, advanced plants. These actions will further improve our cost structure, increase productivity, and reinforce the Hardie Operating System, while ensuring we have the capacity needed to support our growth initiatives. Our focus remains on driving sustainable growth and value creation over the long term.
The decision to close our plants in Fontana, California, and Summerville, South Carolina was not taken lightly, and I want to thank the teams at these sites for their years of dedication and hard work. We are grateful for their many contributions, which have been significant in shaping James Hardie.
Final thoughts on the James Hardie share price
The business has recovered some of the lost ground of the past year, so it’s not as cheap as it was.
James Hardie is doing some of the right things to regain investor confidence. I’m not sure if the business is still good value today but if it grows earnings then it could continue to rise in the coming years.
There are plenty of ASX growth shares I’d rather buy.
