Surprise surge in asbestos claims pressures James Hardie
The company has raised the prospect that the number of asbestos claims cases could peak years from now, although the building materials maker said it needed more time to see if this trend continued.
For the past few years, James Hardie actuaries have predicted that the "peak year" for asbestos claims was financial year 2011. 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. In addition, the cost of payouts is running higher and are expected to put pressure on a compensation fund that has been set aside for victims of James Hardies' asbestos products.
James Hardie said its profit was expected to remain steady as housing conditions in the US and Australia improved. Chief executive Louis Gries said sales in the US increased 10 per cent and those in Australia had risen 5 per cent over the three months to June 30.
Frequently Asked Questions about this Article…
James Hardie has reported a new spike in asbestos claims linked to its products, with the company saying the number and cost of some claims have been higher than expected. That rise in claims and payouts has put pressure on a compensation fund set aside for victims of James Hardie’s asbestos products.
Between March and June this year, James Hardie received 160 new asbestos claims, which was above the company’s expectation of 135 claims for that period.
Yes. The company said the cost of some payouts is running higher than expected, and those increased costs are likely to put pressure on the compensation fund set up for asbestos victims.
James Hardie noted that the number of asbestos cases could peak years from now, but the company also said it needs more time to determine whether the recent trend will continue. Historically, its actuaries had predicted the 'peak year' for asbestos claims would be financial year 2011.
Rising claim volumes and higher-than-expected payout costs are expected to place pressure on the compensation fund that James Hardie has set aside for victims of its asbestos products, potentially affecting how much of those reserves are available over time.
James Hardie said its profit was expected to remain steady, citing improvements in housing conditions in both the US and Australia as supportive factors for its business.
According to chief executive Louis Gries, sales in the US increased by 10% and sales in Australia rose by 5% over the three months to June 30, which the company says supports its steady profit outlook.
Investors should monitor updates on the number and cost of asbestos claims, any changes to the compensation fund or reserves, company commentary on whether the recent spike is a sustained trend, and continuing sales and housing-market trends in the US and Australia.
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