Drop in underground sales bites Bucyrus

A SECOND-quarter reduction in underground equipment sales by Bucyrus played a role in an 11% net profit slip, though the OEM held fast to its full year revenue expectations.
Drop in underground sales bites Bucyrus Drop in underground sales bites Bucyrus Drop in underground sales bites Bucyrus Drop in underground sales bites Bucyrus Drop in underground sales bites Bucyrus

A Bucyrus longwall

Donna Schmidt

For the period ended June 30, net profit totaled $US73.2 million, versus $82.2 million during the corresponding period in 2009.

 

Overall sales for the company rose 19.9% in the quarter to $868.6 million, which included $277 million for Terex. Bucyrus completed its acquisition of the surface and highwall-focused manufacturer on February 19.

 

Broken down by segment, surface mining sales including Terex’s contribution were $605.3 million, compared to $356.04 million last year.

 

Original surface equipment sales rose more than 88% to $282.9 million, while aftermarket rose 70% to $322.4 million.

 

However, lower-than-anticipated new underground equipment sales bruised the OEM in the June quarter, falling year-on-year to $263.2 million from $368.3 million.

 

Aftermarket parts and services were up 27% to $110.7 million, while new sales fell almost 30% to $152.5 million.

 

Bucyrus’ capital expenditures for the first half of the year, excluding costs incurred in the Terex acquisition, were $30.4 million. For the year, the company is anticipating capex to total $70-$80 million.

 

“I think, in many respects, a very good quarter with a strong market as we move toward the second half of the year,” company president Tim Sullivan said.

 

He noted that the company will maintain guidance for the year and has estimated sales to be approximately $3.65-$3.75 billion.

 

Some financial analysts have linked Bucyrus’ weak sales performance to declines in order backlog, which began last year when operators postponed orders on falling coal and commodity prices.

 

At the close of 2009, backlog expected to be recognized in a 12-month period was down 26% from the start of the year. While that backlog grew 27.4% in the first half of this year, last year’s reductions are still having an impact.

 

"We've been concerned about this for a while now," Gradient Analytics analyst Nick Gibbons told the Wall Street Journal.

 

"The backlog is the revenue line going forward. The company really needs to explain where the revenue trajectory is going to go."

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