James Hardie downgrades expected profit

James Hardie says it won't make as much profit as expected in fiscal 2017 because production constraints are hampering its ability to meet increased demand.

Building products maker James Hardie's first-half profit dropped 24 per cent to $A192.6 million. (AAP)

Building products supplier James Hardie has downgraded expectations for its full-year adjusted net operating profit, saying production constraints are affecting its ability to meet US demand.

James Hardie on Thursday noted that analysts' forecasts for net operating profit excluding asbestos-related adjustments for the year ending March 31, 2017, ranged from $US256 million to $US285 million ($A342 million to $A381 million).

But company management expects full-year adjusted net operating profit to be between $US250 million and $US270 million.

The comparable adjusted net operating profit for fiscal 2016 was $US242.9 million.

James Hardie chief financial officer Matt Marsh said in a briefing for market analysts that James Hardie was taking steps to increase manufacturing capacity to meet strong demand now and in the future.

Mr Marsh said the downgrade was driven by a combination of start-up costs and the company not being able to ship everything it had orders for.

"So a combination of those two is really the driver of the adjustment down to $US250 million to $US270 million," Mr Marsh said.

James Hardie chief executive Louis Gries said it would be another two or three quarters (six to nine months) to get James Hardie's manufacturing network up to targeted performance levels.

James Hardie expects the US housing market to grow steadily in fiscal 2017.

But although US housing activity was improving, market conditions were uncertain and some input costs were volatile.

In Australia, net sales are expected to trend in line with the average growth of the renovation and single detached housing markets in the eastern states.

James Hardie on Thursday booked a 24 per cent fall in first-half profit to $US144.1 million, mainly due to greater asbestos-related adjustments in the prior corresponding period.

Excluding asbestos-related adjustments, net operating profit was up 10 per cent to $US141.4 million, from $US128.7 million a year earlier.

Net sales rose by 11 per cent to $US973.5 million, driven by higher sales volumes in the North American fiber cement business and a higher average net sales price in the international fibre cement segment, which includes Australia.

Although demand in the renovation and new housing markets grew in the US, James Hardie's production costs increased because of unfavourable plant performance and higher start-up costs associated with lifting the production capacity of the US plants.

In Australia, net sales for the half-year lifted due to a higher average net sales price and greater volumes, reflecting favourable market conditions.

RBC Capital Markets analyst Andrew Scott said James Hardie's result was solid.

But the guidance pointed to a transition year for the company, where good volume growth does not provide the upside that the market may have anticipated.

Shares in James Hardie were 22 cents higher at $19.73 at 1208 AEDT.

JAMES HARDIE 1H PROFIT

* First-half net profit down 24pct to $US144.1m

* Net sales up 11pct to $US973.5m

* Interim dividend of 10 US cents per security, up one US cent