James Hardie asbestos claims spike
At the same time the company has raised the prospect that the number of asbestos claims cases could peak several years from now, although it said it needed more time to see if this trend would continue.
For the past few years, James Hardie actuaries had predicted that the "peak year" for asbestos claims was the 2011 financial year. Figures released on Monday show between March and June this year, the company received 160 new claims. This is above expectations of just 135 claims. Also, the cost of payouts is running higher.
The higher numbers are expected to put pressure on a compensation fund for victims of James Hardie's asbestos products. The company makes annual contributions to the fund.
The figures come as James Hardie said its profit expected to remain steady as housing conditions in the US and Australia improve.
Chief executive Louis Gries said sales in the US increased 10 per cent and those in Australia have risen 5 per cent over the three months to June 30.
James Hardie reported a first quarter operating profit of $US52 million ($56.9 million), up 19 per cent from the previous corresponding period.
Frequently Asked Questions about this Article…
James Hardie reported an unexpected spike in asbestos claims tied to its products. Between March and June this year the company received 160 new claims versus an expected 135, and the average cost of settled claims has come in higher than anticipated.
Yes. The article says the average cost of settled asbestos claims is higher than expected and overall payouts are running higher, which increases the financial burden linked to these claims.
James Hardie has flagged that the number of asbestos claim cases could peak several years from now but said it needs more time to see if the current trend continues. Previously, company actuaries predicted the peak year would be the 2011 financial year.
Higher claim numbers and costlier payouts are expected to put pressure on the compensation fund for victims of James Hardie’s asbestos products. The company makes annual contributions to that fund, so increased claims could require larger or more frequent contributions.
Despite the claims spike, James Hardie reported a first-quarter operating profit of US$52 million (A$56.9 million), up 19% from the prior corresponding period. The company said its profit is expected to remain steady as housing conditions in the US and Australia improve.
Chief executive Louis Gries said sales in the US increased 10% and sales in Australia rose 5% over the three months to June 30, reflecting improving housing conditions in both markets.
James Hardie received 160 new asbestos-related claims between March and June, which exceeded the company’s expectation of 135 new claims for that period.
Everyday investors may want to monitor updates on the number of new asbestos claims, average claim settlement costs, any changes in the company’s contributions to the compensation fund, quarterly profit reports, and commentary about when claims might peak, as these factors could influence the company’s financial position.
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