Joy Global forecasts ‘sluggish’ recovery

Joy Global Inc. reported third quarter net income of $193.6 million, or $1.81 per share, up from $173.1 million, or $1.62 per share, in the same period a year ago.

The Milwaukee-based mining equipment manufacturer’s quarterly net sales grew to $1.4 billion from $1.1 billion a year earlier.
“Our results this quarter continue to show strong execution, but against a market backdrop of adjustment to lower demand for U.S. coal and continued slowing of the Chinese economy”, said Mike Sutherlin, president and chief executive officer. “The original equipment order rate is impacted by a project pipeline that has slowed but still has several new projects that should reach equipment selection in the near term. Reduced aftermarket orders in the U.S. have been mostly offset by increased orders from international markets. Our operating focus continues to deliver results, with profit leverage of 25 percent on a 22 percent increase in revenues, and this operating efficiency will serve us well as we address market uncertainty and volatility. Although there is evidence that both the U.S. and China markets have bottomed, we expect a recovery to be sluggish. We are therefore beginning the implementation of our prior downside planning by adjusting our operations to match current market conditions so that we can deliver performance over a range of possible outcomes.”
The demand for commodities has slowed, adjusting to weaker global economic growth. Recent economic data is mixed, but is generally consistent with low U.S. growth, Europe contracting and China decelerating, the company said. U.S. coal has experienced the most severe decline, driven primarily by lower electricity demand and electricity generators switching to natural gas.
“The outlook for our business has continued to decline over the past quarter,” Sutherlin said. “Although the U.S. market has progressed in line with our expectations, the deceleration of China demand has deteriorated international markets more quickly and severely than previously expected.”
With news of the weaker forecast, Joy Global’s stock shares fell by $1.60 per share this morning.

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