Joy Global eyes costs

LEADING underground mining machinery maker Joy Global aims to advance cost reduction efforts as its recent quarterly results include a more than 50% year-on-year fall in net income and almost a 20% YoY drop in bookings.

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For the three months ending January 30, Joy Global posted an adjusted net income of $US24.6 million ($A31.51 million) – a little more than half of the $50 million clocked up in the corresponding period of the previous year.

Its consolidated bookings reached the value of $700 million for the recent quarter – down 19% from a year ago.

In terms of its coal outlook, Joy Global said US coal exports were expected to fall by 8% in 2015 to 90 million tons while US coal demand could fall by nearly 50Mt.

“The challenges seen in seaborne thermal coal markets are expected to persist throughout 2015 as supply growth continues to outpace a strained demand environment,” Joy Global said.

“Despite Indian coal imports growing annually at 16 percent, strong production in Indonesia coupled with 8 percent growth in Australian exports have left the seaborne thermal coal market well supplied.

“Conversely, seaborne metallurgical coal markets appear closer to finding an equilibrium balance as prices have averaged $114 per tonne since April 2014. The production curtailments announced in 2014 are expected to support prices at current levels, with the possibility of some marginal improvement by year-end.

“On the demand side, the largest driver remains the health of global steel consumption which is expected to increase approximately 2 percent in 2015. The combination of continued supply restraint and stable demand should continue to drive metallurgical coal back to an equilibrium point.”

Joy Global president and CEO Ted Doheny said falling commodity prices created additional challenges for its customers and slowed down order rates.

“Until supply and demand conditions improve, we anticipate reduced bookings activity, although the run rate is expected to be above the seasonally slower fiscal first quarter level,” he said.

“With the further slowdown in our end markets, we are accelerating our cost reduction programs while remaining steadfast in building out our new underground hard rock platform and driving new product development and service strategies that will help our customers sustainably lower their cost positions.”

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