As world’s second largest economy, China grapples with economic slowdown, the demand for steel, iron, coal and several other commodities have contracted leading to fall in demand for mining equipments, said Joy Global Inc. (NYSE: JOY) on Wednesday as the company reported lighter-than-expected fiscal third quarter results.
Although, the equipment maker reported 12% jump in earnings from the year earlier quarter, its profit and sales fell short of analysts’ expectations.
The Milwaukee-based company has also trimmed its fiscal 2012 revenue guidance and expects fiscal 2013 revenue to be flat or tad lower than 2012 fiscal revenue if the current weakness in the economy continues.
Reacting over the results, Company’s Chief Executive Mike Sutherlin said to analysts in a conference call, “We’re moving to weaker market conditions…Right now, we don’t see any catalysts for an upside until we see some strength in end-user commodity demand.”
Meanwhile, in the U.S. Joy Global’s coal equipment division also struggled as more and more utilities companies are switching to low cost energy generating sources such as natural gas instead of coal.
The CEO also said that company has started restructuring its business in order to cut costs and bring down production volumes.
For the quarter which ended on July 27, the Company’s profit stood at $193.5 million, or $1.81 a share, compared to $173.1 million, or $1.62 a share, in the year earlier quarter. Sales climbed 22% to $1.39 billion thanks to additional revenue generated from LeTourneau and IMM.
Analysts polled by Thomson Reuters had forecasted earnings of $1.88 a share on revenue of $1.42 billion.
Company’s order bookings– a perfect gauge on future sales– contracted 25% to $1.08 billion in the third quarter compared to the corresponding period of last year. Compared to the second quarter, orders in the fiscal third quarter fell by 12%.
In the backdrop of global economic uncertainty, the Company has downwardly revised its full-year earnings outlook. The company now expects earnings in the range of $7.05 to $7.20 a share even as analysts expect earnings of $7.26 a share. The revised earnings, however, does not took in to account for restructuring cost of 14 cents a share in the fiscal fourth quarter. The company also cut its lower and upper range of initial revenue guidance for fiscal 2012. JOY is now expecting revenue between $5.45 and $5.55 billion while analysts are expecting revenue of $5.56 billion.