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James Hardie CEO on the company's earnings results and company outlook

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Dr. Jack Truong, James Hardie Industries CEO, joined Yahoo Finance to discuss his company’s latest earnings results and outlook for the housing sector.

Video Transcript

ADAM SHAPIRO: We want to invite into the stream James Hardie Industries. It's the world's largest maker of fiber cement products, and they just reported earnings recently. And they did quite well, you can imagine, especially with all of the home construction not only underway in the United States, but worldwide. With their sales, it was the eighth straight quarter of growth. So we want to talk about that, obviously, with their CEO.

And joining us now is Dr. Jack Truong, who is CEO from James Hardie Industries. Congratulations. And what I think a lot of us may not understand is that, even though we talk about lumber prices escalating, what you make, most of us would know as siding, among other things. And along with lumber prices going up, the price of just building a new home is going up. Is this impacting your business?

JACK TRUONG: Good afternoon, Adam. Thank you for having me on the show. And certainly in our business, no, because we are really supplying products that go onto the homes, both the new construction and then for home renovation. 1/3 of our business is new construction and 2/3 is in renovation. And renovation is where there's not a lot of issues with the shortage of lumber today.

- Jack, you mentioned 2/3 of your business there is in renovation. What are you seeing, demand-wise, for that? Because we talked about that being such a big trend here over the last 12 months during the pandemic.

JACK TRUONG: Oh, it is actually growing quite nicely, particularly here in the US, and for that matter, in Europe- Western Europe, particularly-- and also in Australia and New Zealand. As you know, there's a lot more-- people work from home and there's a lot more disposable income that the home owners want to beautify their homes. And particularly when you deal with the exterior of the home.

And now telling people to stay at home, they just want to see their home to be more beautiful, particularly from the outside. And we are in the business of delivering the exteriors of the home that-- not only to protect the home, but also to make the home to have different aesthetic designs to whatever the homeowners like. So it is a really sweet spot for us to be in right now.

ADAM SHAPIRO: We had a guest join us yesterday who actually pointed to the fact that lumber futures way out, when you're looking into 2022, have actually fallen and will be below the spot price that we're watching now with lumber. Does that bode some kind of ominous storm cloud for your business, whether it be renovations, that we might see a slowdown in the industry in renovations or new construction?

JACK TRUONG: You know, if the lumber shortage become too-- begin to get better than what we see, then the new construction activity should increase and should get better. Whereas on the renovation side, it's pretty much independent of the lumber shortage.

- Jack, you have a presence not only in the US, but also overseas in Asia-Pacific region, also in Australia. Where are you seeing the most activity?

JACK TRUONG: Right now, most of the housing activity is really happening right here in the US. And then with the recent home builder program, the incentive program the Australian government put in place since last July, the home building activity in Australia has really been going gangbusters. In fact, right now, the home approval rate in Australia is nearly an all-time high. So we see very big housing activity here in the US and Australia, and then to a certain extent in Europe right now. In Germany, the UK, and France, and Scandinavia, we also see quite strong renovation activities. Not so much on new construction in Europe, but really more on renovation.

ADAM SHAPIRO: Why not so much new construction, do you think? Especially for the products you make, because they're not as volatile, say for instance, like lumber. Why wouldn't there be more demand?

JACK TRUONG: Adam, that's a very good question. You know, if you look at the construction method in Europe today, it's primarily masonry and a lot of brick homes. Whereas our products are really more germane to the timber frame construction, which is really the fastest-growing construction type in Europe, because it's lightweight. It's faster to build. And also, it's less expensive. So we see that our type of product into the timber frame construction will be a very good growth opportunity for our company in Europe for many years to come. And that's why Europe is becoming a very big part of our business and a big focus for us for the short, mid, and long term.