Aug. 15 (Bloomberg) -- James Hardie Industries NV and Boral Ltd., Australia's biggest building materials makers, forecast U.S. earnings will fall because of the worst housing slump in 16 years.

James Hardie's profit may slide as much as 16 percent in the 12 months ending March 30, the Sydney-based company said today. The company gets more than four-fifths of sales in the U.S. Boral, based in Sydney, expects declining American sales of bricks and roof tiles to lower profit in its second-largest market.

The collapse of subprime lenders and tighter credit standards has cut U.S. demand for new homes, causing a glut of unsold properties and prompting builders including Toll Brothers Inc. and D.R. Horton Inc. to slash earnings forecasts. James Hardie said it has ``no visibility'' on when the market will improve. Boral forecast the slump may last another 18 months.

``The U.S. really has been belted by the construction slowdown, the housing slowdown and just about every other slowdown you can point a finger at,'' said Michael Birch, who helps manage the equivalent of $133 million at Wallace Funds Management in Sydney. ``They may be a bit more immune than others with their spread of businesses but they are still going to be affected,'' he said in regard to James Hardie and Boral.

`Overbuild'

U.S. housing starts are forecast to fall as much as 10 percent to 1.4 million in fiscal 2008, Boral said.

``Clearly subprime, easy credit without much conditionality has stimulated demand and has contributed to that overbuild,'' Boral Chief Executive Officer Rod Pearse told reporters on a conference call today. ``We think it will take about three years for that overbuild to work through and we're probably about a year and a half into that process.''

Boral shares fell 12 cents, or 1.7 percent, to A$7.15 at the 4:10 p.m. close of trading in Sydney. James Hardie stock rose 2.3 percent to A$7.67. The company said today it will buy back as much as 10 percent of its shares.

James Hardie said first-quarter earnings rose 9 percent to $68.6 million as higher prices for fiber-cement limited the impact of the U.S. slowdown.

The company raised its average price 5 percent in that country helped by demand for home repairs. Sales in the U.S. rose 5 percent to 573.4 million square feet.

``The outlook for North America is for further weakness in new housing activity through the remainder of the year,'' James Hardie CEO Louis Gries said in a statement today.

`Bottom End'

First-quarter Asia Pacific fiber cement earnings rose 20 percent to $12.4 million as customers switched to more profitable products. James Hardie expects continued weakness in the Australia and New Zealand amid higher borrowing costs.

The Reserve Bank of Australia raised interest rates a quarter point to an 11-year high of 6.5 percent last week.

Earnings excluding asbestos-compensation costs are forecast at the ``bottom end'' of analyst expectations of between $187 million and $233 million in the 12 months ending March 30, James Hardie said. It had year earlier profit of $222.2 million.

The company agreed in December 2005 to set up a new fund to compensate victims of its asbestos products, ending a two-year fight with unions and victims. A New South Wales state government inquiry had found the company didn't set aside enough money in an existing compensation fund, and raised questions about its move to register in the Netherlands in 2001.

Boral's second-half profit dropped 21 percent on waning demand for new homes and a fall in U.S. sales of bricks, roof tiles and lumber.

Waning Demand

Net income fell to A$150.4 million ($125 million) in the six months ended June 30, from A$190 million, a year earlier. The profit was calculated by deducting first-half earnings from the A$298 million full-year result the company reported today.

Profit before interest and tax at its U.S. unit tumbled 78 percent in the second half as roof tile and brick sales plunged.

In Australia, building product earnings fell 15 percent as the housing slump in New South Wales, the nation's most populous state, reduced demand for bricks and roofing. Construction material earnings rose 21 percent as highway projects and a resources boom in Queensland and Western Australia increased demand for concrete, cement and asphalt.

To contact the reporter on this story: Robert Fenner in Sydney rfenner@bloomberg.net; Gavin Evans in Wellington at gavinevans@bloomberg.net

Last Updated: August 15, 2007 02:22 EDT