Expansion name of the game for Joy

WITH large jumps in second quarter net income and bookings, a confident equipment manufacturer Joy Global said this week it is raising its whole-year guidance and is looking to further expand its equipment offerings to customers across all of mining.
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Joy Global CEO Mike Sutherlin.

Donna Schmidt

For the period just ended, Joy reported net income of $US162 million, compared year-on-year with $120 million.

Bookings jumped 46% to $1.5 billion and net sales went up 19% to $1.1 billion, while operating income rose from 20% to 22% of sales, or $234 million.

Looking at new orders, original equipment was the winner with a 79% increase over a year ago; aftermarket bookings rose 22%.

In Joy’s underground sector, second-quarter bookings were up $223 million year-on-year.

Original equipment orders to underground clients increased by $149 million, mostly due to a rise in longwall equipment orders in Australia as well as a continued strong demand for room and pillar equipment in the US.

Aftermarket bookings increased $74 million, with the company citing strong parts and component orders across most markets and an increase in service labor bookings in Australia for the rise.

While machine rebuilds were down versus the high levels of last year, Joy cited a continued long-term growth trend for aftermarket rebuilds.

"We had another outstanding quarter, reaching record levels of performance in order bookings, shipments, operating profit margins and earnings per share," company president Mike Sutherlin said.

"The balance in our performance across this range of metrics is more satisfying than the records.”

He noted the capital investments being realized by its clients also continued to be solid.

“They continue to move forward with mine expansion plans based on the strong belief that current capacity must be increased significantly to keep up with demand growth, even if the demand pace moderates.

“Finally, the pending acquisition of LeTourneau will add to our growth prospects by giving us the mining industry's leading wheel loader to compliment our electric rope shovels and from its drilling products that will benefit from the recent strong start to a major construction phase for new drilling rigs.”

Joy entered into a definitive agreement for the LeTourneau Technologies acquisition last month for $1.1 billion in cash; the deal is expected to close in the third quarter.

It is also seeking to expand production capacity through other equipment offerings; for example, Sutherlin said Joy was interested in adding hydraulic mining excavators and underground hard-rock mining machinery and improving the capabilities of the company’s machines for increased versatility.

"Our second-quarter order bookings and the industry fundamentals continue to support our view that we are in the early stages of a multi-year expansion," he said.

"Mining capital expenditure budgets are at record levels, and customers are continuing to execute these expansion programs. As a result, our list of qualified prospects remains at historically high levels despite the record number of machines we booked this quarter and this underscores longer term support for equipment demand.”

Sutherlin said Joy had been pleased with its strong aftermarket booking and shipment performance. It tied those gains into mine production rates, which it sees as another indicator of positive industry fundamentals.

“These gains also validate our strategy to convert the aftermarket from transactions to life cycle management programs; [n]ot only do we get better capture rates with our aftermarket programs, but they result in higher machine reliability for our customers," he said.

As a result of the positives, Joy said in its financial review that it had raised full-year guidance and now expected revenues of $4.1 to $4.3 billion, up from a previous range of $4 to $4.2 billion. The projection does not include costs Joy is expected to incur with the acquisition of LeTourneau.