James Hardie trims earnings forecast

BUILDING products group James Hardie has trimmed its earnings forecast for the year, saying conditions in the housing market remain uncertain.

The group today revealed it had made a net operating profit of $US31.5 million ($30.95 million) in the third quarter to December 31, up from a loss of $US4.8 million ($4.72 million) a year earlier.

The results include the company's asbestos-related costs, plus regulatory costs and tax adjustments.

Excluding those costs, operating profit rose to $US28.8 million ($28.29 million) from $US27.7 million ($27.21 million).

Chief executive Louis Gries said that while the US housing market had gained momentum, earnings growth had been constrained by lower sales prices and higher costs.

But, he said, if the US market continued its recovery, earnings were expected to rise.

However, conditions in Australia remained subdued and the group did not expect a substantial pickup soon.

The group downgraded its full year earnings forecast, excluding the asbestos and other costs, to between $US136 million ($133.61 million) and $US141 ($138.53) million.

James Hardie's net operating profit for the nine months to December 31, excluding asbestos and other costs, rose to $US113.1 million from $US109.3 million (to $111.12 million from $107.38 million). Including the costs, net operating profit fell seven per cent to $US123.6 million from $US115 million ($121.43 million from $112.98 million).

Mr Gries said that in anticipation of a market recovery in the US, James Hardie would expand its production capacity. It will spend $US34 million ($33.40 million) reconfiguring and refurbishing a plant in California, which it had closed in 2008 but now intends to reopen in 2014.

The group said that if it does not undertake any sharebuybacks between now and announcing its full year results in May, it planned to lift its dividend payout ratio. The final unfranked dividend for the year is expected to be 35 US cents, down from 38 US cents the previous year.

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Origin downgrades profit forecast

ENERGY producer and retailer Origin Energy fears its full year earnings will drop by up to 15 per cent after its interim profit fell by a third.

Origin today said its net profit dropped 34 per cent to $524 million in the half year to December 31, from $794 million in the previous corresponding period.

Revenue rose 14 per cent to $7.4 billion, from $6.5 billion.

Origin now expects its full year profit to fall by between 10 and 15 per cent, instead of its previously forecast drop of five to 10 per cent.

It blamed the profit downgrade on a combination of weather, demand and plant availability in January which resulted in an extended period of high wholesale electricity prices in Queensland.

"Origin now estimates that the cost of this event, including additional hedges to reduce exposure to such events in the second half, is approximately $30 to $35 million in underlying profit," the company said. "The consequence of this event cannot be absorbed in the guidance range issued in November 2012 and, therefore, based on prevailing market conditions, guidance for underlying profit for the 2013 financial year is now 10 to 15 per cent below the prior year."

Origin's underlying profit in 2011/12 was $893 million.

The company maintained its fully-franked interim dividend at 25 cents.

Origin managing director Grant King said it planned to cut another 350 jobs in 2013, taking the total number for the year to 850.

"This will result in more focused operations and a lower cost base in the 2014 financial year," he said. "We also continue to review our activities and close, discontinue or divest non-core assets, which will improve our available cash flow in the short to medium term."

Origin expects regulatory and market competitive pressures that affected its first half result for its energy markets division to continue for the remainder of the year. However it expects a strong increase in the contribution of its exploration and production business for the full year, driven by higher levels of plant availability and production in the second half.

Origin has been hit by weakening demand in electricity use at a time when regulators in some states are cracking down on rising prices. The company lost a Queensland Supreme Court battle last December over the state's electricity prize freeze.

Meanwhile, Origin expects its main driver for growth in the future will be its investment in the Australia Pacific LNG project, in which it is a 37.5 per cent stakeholder.

Origin today said it expected the project would be delivered on or ahead of schedule at a cost of $24.7 billion, with the company's investment expected to peak at $4.4 billion. Origin had initially expected to contribute $3.6 billion to the project, which was originally estimated to cost $23 billion.

Origin's shares were $1.00, or eight per cent, lower at $11.39 at 11.19am AEDT.

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