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James Hardie Announces Adjusted Net Operating Profit of US$79.9 Million for Q1 Fiscal Year 2019

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James Hardie today announced results for the quarter ended 30 June 2018:

  • The Fermacell acquisition closed on 3 April 2018 and is included in
    the financial results for the first quarter of fiscal year 2019;
  • Group Adjusted net operating profit of US$79.9 million for the
    quarter, an increase of 29% compared to the prior corresponding period
    ("pcp");
  • Group Adjusted EBIT of US$107.1 million for the quarter, an increase
    of 21% compared to pcp;
  • Group net sales of US$651.0 million for the quarter, an increase of
    28% compared to pcp;
  • North America Fiber Cement Segment volume increased 5% for the
    quarter, compared to pcp;
  • North America Fiber Cement Segment net sales of US$433.8 million for
    the quarter, an increase of 10%, compared to pcp;
  • North America Fiber Cement Segment EBIT margin of 24.7% for the
    quarter;
  • Asia Pacific Fiber Cement Segment EBIT margin of 24.2% for the
    quarter; and
  • Europe Building Products Segment Adjusted EBIT margin excluding costs
    associated with the acquisition of 11.9% for the quarter.

CEO Commentary

James Hardie CEO Louis Gries said, "Our North America Fiber Cement
Segment delivered solid top line growth of 10% for the quarter. Volume
increased 5%, with our interiors business having only marginal growth
and our exteriors business returning to growth above our addressable
market. While we have returned to growth above our market index in our
exteriors business, increased traction will be required to hit our FY19
targeted range."

He continued, "Within our Asia Pacific Fiber Cement Segment, net sales
increased 15% for the quarter, primarily due to the strong growth in our
Australian business. Furthermore, EBIT increased 7% for the quarter,
driven by the strong performance of our Australian business, partially
offset by the performance of our New Zealand business."

He added, "We closed our acquisition of Fermacell to start the quarter
on 3 April 2018, and the new Europe Building Products Segment delivered
strong net sales compared to the prior corresponding period, and an
Adjusted EBIT margin excluding costs associated with the acquisition of
11.9%. We are encouraged by the early indicators from our European team."

Mr. Gries concluded, "Our group results reflect robust Adjusted EBIT
growth for the quarter, driven by improved North America results and
earnings from the Fermacell business which was acquired during the
quarter. Further, although our North American Fiber Cement segment EBIT
margin of 24.7% is in the upper part of our target range, we will be
pressured by a continued inflationary environment impacting input and
freight markets throughout the year. Finally, on 2 July 2018, we made a
payment of US$103.0 million to AICF, representing 35% of our free cash
flow, as defined by the AFFA, for fiscal year 2018."

Outlook

We expect to see the steady growth in the US housing market to continue
in fiscal year 2019. The single family new construction market and
repair and remodel market are expected to grow similarly to the
year-on-year growth experienced in fiscal year 2018. The Company expects
new construction starts between approximately 1.2 and 1.3 million.

We expect our North America Fiber Cement segment EBIT margin to be in
the top end of our stated target range of 20% to 25% for fiscal year
2019. This expectation is based upon the Company continuing to achieve
strong operating performance in its plants, stable exchange rates and a
moderate inflationary trend for input costs.

Net sales from the Australian business are expected to trend above the
average growth of the domestic repair and remodel and single family
detached housing markets in the eastern states of Australia.

Full Year Earnings Guidance

Management notes the range of analysts' forecasts for net operating
profit excluding asbestos for the year ending 31 March 2019 is between
US$313 million and US$358 million. Management expects full year Adjusted
net operating profit to be between US$300 million and US$340 million
assuming, among other things, housing conditions in the United States
continue to improve in line with our assumed forecast of new
construction starts, input prices remain consistent and an average
USD/AUD exchange rate that is at, or near current levels for the
remainder of the year. Management cautions that although US housing
activity has been improving, market conditions remain somewhat uncertain
and some input costs remain volatile.

The comparable Adjusted net operating profit for fiscal year 2018 was
US$291.3 million. The Company is unable to forecast the comparable US
GAAP financial measure due to uncertainty regarding the impact of
actuarial estimates on asbestos-related assets and liabilities in future
periods.

Further Information

Readers are referred to the Company's Condensed Consolidated Financial
Statements and Management's Analysis of Results for the three months
ended 30 June 2018 for additional information regarding the Company's
results, including information regarding income taxes, the asbestos
liability and contingent liabilities.

As of 30 June 2018, the Company changed its reportable operating
segments. Previously, the Company reported on four operating segments:
(i) North America Fiber Cement, (ii) International Fiber Cement, (iii)
Other Businesses, and (iv) Research and Development. As of 30 June 2018,
the Company began reporting on five operating segments: (i) North
America Fiber Cement, (ii) Asia Pacific Fiber Cement, (iii) Europe
Building Products, (iv) Other Businesses, and (v) Research and
Development. The significant changes to how certain businesses are
reported in the new segment structure are as follows: (i) our European
Fiber Cement business as well as the newly acquired Fermacell business
are now reported as the Europe Building Products segment, and the
remaining businesses that were historically reported in the
International Fiber Cement segment are now reported in the Asia Pacific
Fiber Cement segment. The Company has revised its historical segment
information for the three months ended 30 June 2017 to be consistent
with the new reportable segment structure. The change in reportable
segments had no effect on the Company's financial position, results of
operations or cash flows for the periods presented. Readers are referred
to Note 15 of our condensed consolidated financial statements for
further information on our segments.

Use of Non-GAAP Financial Information;
Australian Equivalent Terminology

This Media Release includes financial measures that are not considered a
measure of financial performance under generally accepted accounting
principles in the United States (GAAP), such as Adjusted net operating
profit and Adjusted EBIT. These non-GAAP financial measures should not
be considered to be more meaningful than the equivalent GAAP measure.
Management has included such measures to provide investors with an
alternative method for assessing its operating results in a manner that
is focused on the performance of its ongoing operations and excludes the
impact of certain legacy items, such as asbestos adjustments.
Additionally, management uses such non-GAAP financial measures for the
same purposes. However, these non-GAAP financial measures are not
prepared in accordance with US GAAP, may not be reported by all of the
Company's competitors and may not be directly comparable to similarly
titled measures of the Company's competitors due to potential
differences in the exact method of calculation. For additional
information regarding the non-GAAP financial measures presented in this
Media Release, including a reconciliation of each non-GAAP financial
measure to the equivalent US GAAP measure, see the section titled
"Non-US GAAP Financial Measures" included in the Company's Management's
Analysis of Results for the first quarter ended 30 June 2018.

In addition, this Media Release includes financial measures and
descriptions that are considered to not be in accordance with US GAAP,
but which are consistent with financial measures reported by Australian
companies, such as operating profit, EBIT and EBIT margin. Since the
Company prepares its Consolidated Financial Statements in accordance
with US GAAP, the Company provides investors with a table and
definitions presenting cross-references between each US GAAP financial
measure used in the Company's Consolidated Financial Statements to the
equivalent non-US GAAP financial measure used in this press release. See
the sections titled "Non-US GAAP Financial Measures" included in the
Company's Management's Analysis of Results for the first quarter ended
30 June 2018.

Forward-Looking Statements

This Media Release contains forward-looking statements and information
that are necessarily subject to risks, uncertainties and assumptions.
Many factors could cause the actual results, performance or achievements
of James Hardie to be materially different from those expressed or
implied in this release, including, among others, the risks and
uncertainties set forth in Section 3 "Risk Factors" in James Hardie's
Annual Report on Form 20-F for the year ended 31 March 2018; changes in
general economic, political, governmental and business conditions
globally and in the countries in which James Hardie does business;
changes in interest rates, changes in inflation rates; changes in
exchange rates; the level of construction generally; changes in cement
demand and prices; changes in raw material and energy prices; changes in
business strategy and various other factors. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those described
herein. James Hardie assumes no obligation to update or correct the
information contained in this Media Release except as required by law.

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