James Hardie says CEO Louis Gries to step down, names successor
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James Hardie says CEO Louis Gries to step down, names successor

The head of home sidings and fibreboard maker James Hardie, Louis Gries, will step down as chief executive of the company next year, to be replaced by Jack Truong.

Mr Truong's appointment will become effective toward the end of the firm's 2019 fiscal year, after which Mr Gries will leave the company.

Change of leaders: Jack Truong (right) wil take over from CEO Louis Gries (left) next year.

Change of leaders: Jack Truong (right) wil take over from CEO Louis Gries (left) next year.

Photo: Supplied

The change in leadership will end the more than 13 years tenure of Mr Gries at the helm of the fibreboard maker, which records a majority of its sales in North America. Mr Gries said his successor's appointment completes a process James Hardie started about four years ago, when he flagged his intention to retire at the age of 65. Mr Gries turns 65 in November.

James Hardie hired Mr Truong around 18 months ago. He currently runs James Hardie's Asia Pacific fibre cement business and its Europe building products business. Prior to this, he was the chief executive of Electrolux Appliances North America and spent 22 years at 3M.

James Hardie said its board has set a handover period of about six months, during which Mr Truong will become president and chief operating officer and run the group's global business. Mr Gries will remain as chief executive during the handover.

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Mr Gries said that despite the change in leadership, the company remained committed to its existing strategy. “We see organic growth as the best way forward to deliver returns, and the fact I’m leaving the building doesn’t change that,” he said.

Mr Truong said he would be "focusing on strengthening our capabilities and on growing towards our strategic goals”.

UBS analyst James Brennan-Chong said the change in leadership had been well flagged, and well received by the market.

"This news of a transition is something the market has waited for for some time; Jack Truong was the front-runner, so his appointment comes as no surprise," Mr Brennan-Chong said.

"There's a view in the market of Louis Gries as the master, so Jack Truong will have big shoes to fill, but he has shown he is capable."

Asbestos obligations

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Mr Gries and Mr Truong reiterated James Hardie's commitment to its asbestos liability obligations.

The company still faces a number of mesothelioma claims over its use of asbestos in its fibreboard products until 1987. James Hardie currently pays around 35 per cent of its free cash flows into a fund created for victims of cancer caused by asbestos exposure.

While there was the belief that these claims had hit a peak in 2017, it is now expected that these cases will not begin to trend downwards until the mid-2020s amid expectations of a third wave of sufferers exposed to James Hardie's asbestos products during home renovations.

The first round of people affected by asbestosis were miners in the James Hardie operations, then came users of the products within the construction industry. The expected last wave of people suffering from asbestos-related cancer, pushing out the claims range, are those peripherally exposed, such as those who worked in buildings with asbestos or renovators, according to Peter Tighe, head of the federal government's Asbestos Safety and Eradication Agency.

Mr Gries said James Hardie's fund to compensate asbestos victims had been "operating successfully for a number of years, and even during the downturn, we had a backstop to ensure funding remains. There's no change in our obligation."

Mr Gries was appointed to lead the firm in February 2005 and has overseen a surge in its market capitalisation from less than $3 billion to $9.21 billion.

ASX-listed James Hardie shares opened at $20.55, a 1.5 per cent drop from its Thursday closing price of $20.87, marking the lowest trading point seen in 2018. It rose to $20.64 by mid-morning.

With Reuters

Covering energy and policy at Fairfax Media.

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