Joy cheery on 2010

A TIGHTER rein on costs has helped Joy Global increase profits in the fourth quarter and left the original equipment manufacturer optimistic about increasing orders in 2010.

Donna Schmidt
Joy cheery on 2010

For the period ended October 31, net income was up 5% to $US124 million, versus 2008’s $118 million.

Net sales were down 7% year-on-year to $964 million from $1 billion and operating income was also down over the same period, to $184 million.

For the whole year, Joy’s net sales were $3.6 billion, a 5% jump from 2008’s $3.4 billion.

The surface mining equipment segment suffered a 6% sales decrease, but net sales for underground mining machinery went up 11% on increased original equipment shipments to US coal mines.

Across 2009, the OEM’s operating income jumped 16% to $151 million. The company pointed to increased volume and the net favorable impact of price realization, improved supply chain management, and cost control efforts for the result, in addition to improved original equipment sales.

"We continued to deliver exceptional performance in our fourth quarter and finished our fiscal year with record revenues, earnings and profitability," Joy chief executive Mike Sutherlin said.

"Our process improvement efforts have delivered the second consecutive quarter of reduced inventory levels. With the help of higher profits and lower inventories, cash from operations was strong despite reduced customer deposits, and we finished the year with substantially lower net debt.”

The company’s final quarter bookings fell 44% year-on-year to $683 million, but rose 6% quarter-on-quarter. Orders saw an 8% reduction year-on-year after the impact of cancellations was taken into account.

Joy said original equipment orders totaled $181 million, a 74% drop year-on-year and flat with the 2009 third quarter.

While aftermarket orders were down 5% year-on-year they were up 9% over the third quarter due to increased bookings in South Africa and Eurasia.

Looking ahead, the OEM called 2009 the “cyclical floor” for its incoming orders due to order rate consistency over the past four quarters, but said the coming year held much promise.

"Our customers are increasing their capital expenditure budgets for 2010, and are also validating equipment specifications and confirming production slots to enable them to reactivate some of the projects they previously put on hold,” Sutherlin noted.

“As such, we expect 2010 to be a year of improving order rates."

The company anticipates that orders for original equipment will return to a “typical lumpy pattern” on the timing and size of projects, but the sectors of international coal, copper, iron ore and oil sands would all see the greatest potential for order growth.

“Original equipment orders for the US coal market will be limited to met coal demand and otherwise to machine replacements based on the higher productivity of new technology,” Sutherlin outlined.

“Aftermarket orders in our second half of fiscal 2009 were up 6 per cent from the first half, and we expect this trend of steady improvement to continue as our international customers bring production back online during 2010."

The OEM also does not anticipate a sizeable upside potential to 2010 revenues because the original equipment order bookings that will be made in 2010 will primarily become 2011 shipments. Additionally, the aftermarket segment will be limited by a steadier improvement rate.

For fiscal 2010, the company outlined revenue guidance of $2.8-3 billion.

“We expect cash flows to be stable, and are budgeting capital expenditures of $100 million as we reactivate strategic projects to get their benefit early in the up-cycle,” Joy said.


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