The company, which reported a 32% higher year-on-year operating income for the quarter to January 28, 2011, to $154 million, expects expansion activity in mining around the world to continue to drive its growth.

"We are very pleased with the solid results we delivered in our first quarter," Joy president and chief executive Mike Sutherlin said.

"Compared to a year ago, income was up 34 per cent on a 19 per cent sales increase, resulting in incremental operating leverage of over 25 per cent.

“These results include normal first-quarter seasonality that is driven by a high number of holidays in the quarter. The results meet our internal targets and, when seasonality is considered, put us solidly on track to meet expectations for the year."

Original equipment orders in the underground business increased by $327 million from the previous year, largely attributable to the major longwall system at Gujarat and to continued strong demand for room and pillar equipment in the US.

Joy won the $A90 million contract to supply longwall equipment for the NRE No1 colliery in April.

The longwall order was a full-scope, turnkey solution, including all the ancillary equipment needed to operate the longwall and a follow-on life cycle management contract. It is anticipated that longwall projects in the future will increasingly adopt this contract structure.

"Bookings were up 18 per cent sequentially from the fourth quarter of last year, with strong orders for both original equipment and aftermarket,” Sutherlin said.

“The aftermarket is particularly encouraging because it indicates that our customers continue to increase their production levels in response to growing demand. The strong order rate is in line with our market outlook that customer capital expenditures will increase in response to improving commodity demand and limited excess mine capacity. As a result, we continue to see a multi-year expansion ahead that will become the second leg of a long growth period for mining."

Delays in shipments and service labour brought about by the January flooding in Queensland reduced sales and operating income by $24 million and $8 million respectively. Sales are expected to recover over the next two quarters as the impact of the flooding recedes.

US original equipment order rates remain strong as customers continue to upgrade and expand their fleets. Aftermarket orders in the underground business increased by $21 million over last year, with products comprised primarily of parts and rebuilds.

Parts demand was up across all regions, but rebuild bookings in the US decreased compared to last year. Last year's underground rebuild bookings were unusually high as US customers moved quickly to secure available rebuild slots when activity started to improve.

Bookings in the first quarter fiscal 2011 were up $419 million over a year ago and up $183 million on the fourth quarter. Original equipment orders more than doubled and aftermarket orders were up 18% year-on-year.

Net sales in the underground business increased by 21% in the first quarter to $511 million. Original equipment sales were up 11%, led by longwall deliveries to China and room and pillar sales in the US. Aftermarket sales were up 29% due to higher parts and rebuild sales. Parts sales increased from last year in most regions, led by China and the US, while rebuilds were also up in the US, Africa and the UK.

Operating income for the first quarter increased by $36 million to $154 million. Operating margins improved from 16.1% last year to 17.7% this year, for incremental operating profitability of 25.8%. Operating margins were driven by positive price realisation, improved overhead absorption and a favourable mix effect with a higher proportion of aftermarket sales. These benefits were partially offset by higher product development, selling and administrative costs.

Product development cost increases were attributed to increased funding of certain research and development costs as they moved into the final testing phase. Selling and administrative cost increases were associated with initiatives, such as the Operational Excellence programs, which were creating efficiencies on the shop floor.

Product development, selling and administrative expenses are expected to remain near current levels for the remainder of the year, but decline as a percentage of sales.

"We expect continued strength in the demand for mining equipment and aftermarket services as our customers increase their production levels and add to their mine expansion plans," Sutherlin said.

"This outlook is supported by two underlying trends. First, the list of qualified machine prospects continues to increase even with the strong growth in original equipment bookings, which were up 49 per cent sequentially.

“Secondly, our customers are moving discussions from single projects to expansion programs that span four to five years and involve multiple projects. In combination, these underlying trends provide confidence that we are in the early stages of a long-term growth phase.”