In the past, James Hardie has been able to fall back on its fibre cement wonder product to see it through tough times. But the US housing market is in free fall, with new housing starts down 55% from their 2006 peak, and in the year to 31 March 2008, US fibre cement sales fell 9% to $1,145m. Overall, net profit for the year fell 20% to US$170m, before asbestos charges and various asset writedowns.

The downturn in the US housing market, though, is a minor niggle compared to the company’s ongoing asbestos liabilities. As we explained on 19 Jul 06 (Sell – $6.83), James Hardie has agreed to contribute a substantial portion of its net operating cash flow, initially at least 35%, to a special fund to meet future asbestos claims.

Then there’s the recent announcement that the tax office is likely to pursue the company for up to $250m relating to a 2002 tax audit, and that comes on top of existing disputes with the tax office for up to $368m.

The stock is down 35% since 27 Sep 06 (Sell – $7.26) and putting a value on it looks like being a matter of actuarial guesswork for many years to come. We’re not actuaries and we try to avoid guesswork, so we’ve decided to CEASE COVERAGE.