Asbestos Payouts hit Bottom Line

Article Added May 23rd, 2006 - Print This Story - Bookmark This Story

James Hardie Industries, an Australian building products company, increased its profits by 62%, while claming a loss for 2005. The culprit behind the paper discrepancy is the payouts for asbestos-related diseases.

The company’s sale of fiber cement rose from $208.9 million, almost doubling profits from the same period the previous year. The numbers would seem to show a net profit, when in fact the company showed a loss due to a $715.6 million provision for asbestos claims. The company established the provision after being embroiled in controversy over its handling of claims by victims exposed to products once made, and now suffering from asbestos-related diseases.

Total loss for the company for 2005 was over $500 million due to the provision. The process established a final funding agreement for the claims which included an outlook to future cash outflows and an anticipated tax deduction, a possibility since the company has agreed to contribute $3 billion over the next 40 years to a fund for asbestos victims. The company expects to continue their strong growth in the US market for cement siding, noting that sales were up by 32% during the first quarter of 2006.

Article Added May 23rd, 2006 - Print This Story - Bookmark This Story