Building products giant James Hardie has tightened its profit guidance, suspended its dividends and will close three plants around the world in response to the coronavirus pandemic that has smashed economies around the globe, according to a recent Sydney Morning Herald report.
In a recent trading update, the company reported that 375 jobs will be cut as it shutters manufacturing facilities in Cooroy in Queensland, Summerville in the United States and Penrose in New Zealand.
The Queensland plant on the Sunshine Coast will also close in the middle of calendar 2020, while the closure of the company’s New Zealand plant will mean the end of James Hardie’s manufacturing operations in New Zealand.
The fibre cement products made at Penrose in New Zealand will instead be made at two Australian plants, at Rosehill in NSW and Carole Park in Queensland.
James Hardie Chief Executive Officer, Jack Truong said these decisions are always extremely difficult.
“Our leadership team took this action with considerable thoughtfulness, with the strategic objective of preserving and enhancing the global organisation’s competitiveness over the long term,” he said in the report.
James Hardie said it now expects a full year adjusted net operating profit of $US350 million ($A546.1 million) to $US355 million ($A554 million), which is down from previous guidance of $US350 million to $US370 million.
The company will also temporarily close its manufacturing plant at Siglingen, Germany in order to better match supply and demand in the European market. The closure of the manufacturing plants will result in impairment expenses of about $US90 million in the company’s fourth quarter results, according to the Sydney Morning Herald report.
James Hardie has also joined the growing list of companies suspending dividends, with the company telling shareholders on Tuesday that the move was needed to strengthen the company’s liquidity position in a volatile market.
James Hardie said while it had recorded double digit volume growth in North America and strong revenue growth in Europe its books had been weighed down by higher than expected operational costs in Europe, and unplanned costs related to government-mandated closures of manufacturing plants in New Zealand, Spain and the Philippines.
The company will brief the market on its fourth quarter results on May 19.