What: Shares of James Hardie Industries plc (ASX: JHX) are down $1.01 or 7.2% after releasing its first quarter profit results today. This compares to the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) which finished up 0.3%.
Why the negative price reaction?
It seems a weaker recovery in the U.S. than was originally anticipated at the beginning of the year is the main cause. Chief executive Louis Gries stated that the company had forecast that U.S. housing starts would rise 15% to 18% compared to last year. They now look like increasing only 6% to 8%.
That is not to say that the operating environment for the building products maker has not improved when compared to the same quarter last year. However, operating conditions have forced the company to lower its full-year profit expectations significantly. FY 2015 net operating profit guidance, which was formerly expected by the market to be between US$226 million to US$261 million, has now been guided down to between US$205 million to US$235 million. This is a 10% adjustment to expectations.
Other negative factors:
Apart from the weaker-than-expected operating environment in the United States, other factors weighing upon the share price included:
Poor manufacturing performance.
Asia Pacific earnings were flat year-on-year.
Higher input costs.
Increasing competition.
