New markets offset weak US for Joy

ROOF support orders from the US and Russia and strong aftermarket orders in China helped offset a generally weak US underground coal market, enabling Joy Global to report increased net sales and profit of $US72.9 million for the third quarter.
New markets offset weak US for Joy New markets offset weak US for Joy New markets offset weak US for Joy New markets offset weak US for Joy New markets offset weak US for Joy

Joy shearer on show at MINExpo 2004

Staff Reporter

Underground mining orders increased by 18% compared to the 2006 third quarter, with aftermarket orders increasing 25% led by strong demand in China and the inclusion of the Stamler products.

Underground original equipment orders increased by 9% primarily due to roof support system orders in the US and Russia. New orders were up to $628 million.

“Overall market conditions continue to be positive, especially in our international markets," Joy Global chief Mike Sutherlin said.

“Despite continued short-term weakness in the US, bookings for Joy Mining were up 18 percent over the prior year. This is the result of strong international aftermarket orders and original equipment orders in the US for longwall roof support systems."

Underground original equipment revenue increased 6% from the comparable prior year period, primarily on strength in Australia, but this was offset by a decline in aftermarket revenue of 6%.

Joy attributed the aftermarket slump to continued softness in Central Appalachia.

“With the continued market weakness in US underground coal, the Joy Mining business is positioning itself to take advantage of increased prospects in China, Australia, South Africa, India and Russia," the OEM said.

With this in mind, Joy Global's surface equipment arm, P&H, is building a second facility in Tianjin, China, which will break ground in the fall, with production scheduled in 2008 and full production in 2009.

The company is also carrying out "selected outsourcing" of non-proprietary fabrications.

Joy continued to remain positive in its long-term outlook, expecting continued commodity demand, driven by continued high growth rates in the world economy in general, and from the strong demand in China, India and other developing countries as they continue to industrialise and modernise.

“Our strong international markets continue to improve and offset weakness in US underground coal," Sutherlin said.

“However, the weakness in the US coal market has continued for longer than we anticipated and we will continue to position ourselves so we are not dependent on the timing of its recovery.

“Therefore, we are reducing expenses related to the US market, knowing that we can respond quickly when meaningful improvement in this market does begin to materialise.

“This will allow us to maximise our opportunities for revenue and profitability gains in the current market conditions."

Joy Global issued revenue guidance for the next 12 months of $2.6–2.8 billion, operating earnings of $490–530 million and earnings per share of $2.90 to $3.15.

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