An increase in service orders helped Joy Global Inc. increase bookings in the first quarter, but the company is not expecting the improved conditions to continue.
The Milwaukee-based mining equipment maker reported a net loss of $277,000, an improvement over the $40.2 million loss during the same period last year. Revenue, however, was down 5.4 percent to $497.8 million.
“Over the last several months we have seen further evidence of commodity markets rebalancing, which has helped improve commodity pricing,” said Ted Doheny, Joy Global president and chief executive officer. “These pricing improvements and increased production levels have strengthened cash flows for many mining companies. This has led to increased rebuild activity in what is typically a seasonally slower fiscal first quarter.”
The company reported $524 million in bookings for its service business; a 21 percent increase compared 2016. Original equipment bookings, however, were down 23 percent to $91 million.
Joy stopped holding earnings calls after announcing it would be acquired by Komatsu America last year. The company expects that transaction to close in the middle of the year.
“While we are encouraged by recent market developments, the level of service bookings achieved in the first quarter is not expected to repeat over the remainder of the year,” Doheny said in the company’s earnings release.
The company said commodity markets have been rebalancing and prices have been improving since early November. In particular the company said it expects coal production to increase by 3 percent in U.S. this year. Production had fallen 27 percent since 2014.
“As global economic activity continues to improve, there is increasing sentiment that the mining industry is nearing a bottom. While there is evidence the deferred maintenance cycle on installed equipment is coming to an end, investment in new capacity remains slow. Only projects that deliver a step change in productivity are proceeding,” Doheny said. “Despite this hurdle, our teams remain focused on advancing our strategic growth and operational excellence initiatives to position the company for success as the mining industry recovers.”