Mining solutions provider Joy Global Inc. (JOY: Quote) on Thursday reported better-than expected profit and net sales for its second quarter benefited by higher shipments. Meanwhile, the company trimmed its fiscal 2012 forecast citing lower bookings.
Second-quarter bookings fell 19.2 percent to $1.23 billion hurt by sharp decline in orders for the core underground and surface businesses. Aftermarket bookings were hurt by reduced orders in Australia, the U.S. and Eurasia, offset by stronger orders in China and South Africa.
According to the company, the bookings reflect anticipated decline in demand for original equipment for the U.S. market, but also include the normal lumpiness in timing that is characteristic of international projects. We believe there is sound basis for demand upside, the company noted.
Joy Global also said it is turning its focus to trimming costs.
For its second quarter, net income attributable to the company was $213.59 million or $2 per share, higher than last year's $161.97 million or $1.52 per share.
Adjusted income, before acquisition activities and unusual items, grew to $1.98 per share from last year's $1.53 per share. On average, 18 analysts polled by Thomson Reuters expected the company to earn $1.95 per share for the quarter. Analysts' estimates typically exclude special items.
Quarterly net sales climbed 45 percent to $1.54 billion, beating Wall Street analysts' consensus estimate of $1.43 billion, benefited partly by the acquired businesses of LeTourneau Technologies Inc. and International Mining Machinery.
Excluding these, net sales from core business grew 24.3 percent, despite negative foreign exchange rates.
President and Chief Executive Officer Mike Sutherlin noted that the company's efforts on cycle time reduction allowed it to increase shipments in core Joy underground and P&H surface businesses.
Looking ahead, Joy Global currently expects fiscal 2012 earnings per share between $7.15 and $7.45 on revenues between $5.5 to $5.7 billion. The company's previous forecast was for earnings in a range of $7.40 to $7.80 per share on revenues between $5.6 billion and $5.8 billion. Analysts expect the company to report earnings of $7.60 per share on revenues of $5.7 billion for the year.
According to Sutherlin, the aftermarket bookings rate would adversely impact revenues and earnings as the current softness in the U.S. aftermarket orders would not completely offset by strength in the international markets. The results would also include the excess first year purchase accounting charges for IMM. These two items will reduce 2012 revenues by $100 million and earnings per share by $0.35, the company noted.
Noting that the mining companies remain cautious despite an upside to the current market conditions, Sutherlin said, "we expect that our order rates could moderate and revenues flatten for a few quarters, until global economic recovery and stronger commodity demand provide the basis for customers returning to greenfield expansions."
Joy Global shares lost 5.25 percent on Wednesday. In pre-market activity, shares are losing $1.05 or 1.78 percent and currently trading at $58.
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by RTT Staff Writer
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