Fitch Ratings revised its outlook on James Hardie International Group Ltd. to stable from negative while affirming the company’s long-term issuer default rating at BBB.
The ratings action follows James Hardie’s agreement to divest its European walling and flooring solutions business, Fermacell, to Holcim Group for approximately €840 million, or $980 million. The transaction, valued at an 11.5x multiple of projected fiscal 2026 EBITDA, is expected to close in the first half of 2027, subject to customary conditions.
Fitch also noted that James Hardie plans to close its European fiber cement operations as part of the broader restructuring. The credit agency adjusted its leverage metrics to reflect the financing of the AZEK acquisition completed in July 2025, with Fitch-adjusted EBITDA leverage at 3.9x as of fiscal 2026.
The divestiture is projected to strengthen James Hardie’s balance sheet. The company plans to use proceeds to repay $400 million in senior unsecured notes due in 2028 in the first quarter of fiscal 2027, reducing EBITDA leverage to 3.2x. Fitch expects further deleveraging to 2.5x by fiscal 2027, supported by $600 million in net sale proceeds allocated to debt reduction alongside free cash flow.
James Hardie’s European operations contributed $557 million in revenue and $85 million in EBITDA for fiscal 2026, representing 11.5% and 7.2% of consolidated totals, respectively. The company’s Fitch-adjusted EBITDA margin stood at 24.3% in fiscal 2026, with projected margins rising to 25.5%–26.5% in fiscal 2027 and 26%–27% in fiscal 2028. Fitch also estimated cost synergies of $70 million–$80 million in fiscal 2027, increasing to $105 million–$115 million annually thereafter.
Senior secured notes and term loans rated BBB+ were affirmed, alongside the company’s secured revolver.
