Orders for new equipment jumped to $US728 million, 33% higher than its total order for the year prior, which equalled $548 million. Aftermarket sales, while not as strong, were still up 8% overall (19% excluding underground coal).
Also on the positive were the company’s net sales in the second quarter, which totalled $629 million versus $560 million during the same period in 2006. Hand in hand with that was its operating income, totalling $122 million versus $110 million last year quarter to quarter.
A net income decrease during the quarter was caused by higher interest expenses and amortisation charges relating to Joy’s purchase of Stamler, it said. Compared to the second quarter of last year, net income was $78 million, down from $83 million.
“We were very pleased with second-quarter results,” Joy Global president Mike Sutherlin said. “The results of the second quarter reflect some important strength for the extended up-cycle we see ahead.”
He said a soft market in its biggest sector, US underground coal, had been significantly offset by strong international interest.
“We also saw the aftermarket mitigate the deep decline in original equipment orders in the US coal market, and this reinforces the importance of our focus on building the aftermarket in all regions in which we operate,” he added.
“And finally, our efforts on cost control and productivity improvements continue to impact the bottom line, with EBIT margins above the target range that we set just three years ago.
“Considering these results in light of the continued softness in US coal, we were pleased with the performance of both operations [P&H and Joy Mining].”
Looking forward, Sutherlin said the company “remains very positive” across the commodity board, but in the coal market the international influence is making its mark.
“Coal markets outside of the US have strengthened,” he said.
“Domestic coal production in China has not been able to keep up with rapidly increasing demand as the country continues to industrialise [and] demand on major coal producers has been increased further as the Beijing Government continues to close small township mines for safety violations.”
Sutherlin noted that, as a result, the country is beginning to be a net importer (rather than exporter) of thermal coal.
His concern for US coal weakness was tempered, as he noted a turning of the page is already underway.
“There are recent positive signs that signal conditions are beginning to improve,” he said.
“Coal pricing has been recovering from the depressed levels reached late in 2006.”
However, he added, “The company believes its customers will maintain their market discipline and therefore will not increase production without multi-year contracts at reasonable pricing.”
Clean coal technology will be the shining star for coal’s long-term outlook, Sutherlin said.
“[It] will ensure a bright future for this industry, providing an energy source that is reliable, secure, cost effective and environmentally compliant,” he said.
“Growing energy demands from both the industrialised and emerging markets will require full contributions from all energy sources, and clean coal will play a major role in the future energy portfolio.”
