Wednesday, August 31, 2011

Joy Global (JOYG) Reports Impressive Quarter

There has been almost no reason to follow data from individual companies the past 2 months or so as everything has been a bipolar macro trade, but of course the beat goes on at the micro level.  Things still seem to be ok in the mining sector if Joy Global's (JOYG) report is any indicator.  An 11 cent beat with 'in line' revenue.  As always JOYG does a nice job of writing quite a detailed assessment of what is going on in their sector within their earnings report.  Full report here.

Via AP:

  • Mining equipment maker Joy Global Inc. said Wednesday its fiscal third-quarter earnings jumped 46 percent, as overseas appetite for commodities including copper, coal and iron ore continued to drive mining projects in the U.S.
  • In the fiscal third quarter that ended in July, the Milwaukee company earned $173.1 million, or $1.62 per share, compared with year-ago earnings of $118.5 million, or $1.13 per share.
  • Revenue rose 34 percent to $1.14 billion from $850 million in the fiscal third quarter of 2010.
  • Analysts expected a profit of $1.51 per share on sales of $1.15 billion.
  • In addition to strong sales, Joy Global said it benefited from higher prices, some customer contract cancellation fees and less manufacturing overhead.
  • Third quarter bookings increased 49 percent to $1.4 billion. Original equipment bookings were up 78 percent, while aftermarket orders were 22 percent higher than a year ago.  Bookings for surface mining equipment almost doubled. Orders for underground mining machinery increased 17 percent.
  • Joy Global said it expects bookings to remain strong, but it does acknowledge that there is "increasing evidence that slowing is underway in economies worldwide, and that growth in the U.S. and Europe may remain structurally lower for several years."

  • The company said it now sees earnings from continuing operations of $5.70 to $6 per share for fiscal 2011 ending in October, an increase of 40 cents a share from its prior projection. Wall Street's current consensus view is for a profit of $5.74 a share for the year. 

Some discussion on commodities specific to China

  • ....the fundamentals in the commodity markets have continued to remain strong. The seaborne markets for copper, coal and iron ore continue to be driven by strong demand from China, India and other emerging markets. Although industrial production and export growth is showing signs of slowing in China, massive infrastructure programs should sustain GDP growth at high levels. Imports were reduced as China worked down inventories of copper and coal in the first half of this year, but recent increases of imports have started to replenish these stocks. 
  • This move from de-stocking to restocking for copper and coal will support commodity demand even if growth slows. Chinese copper imports grew sequentially in June and July, with June up 10 percent and July up 9.5 percent. Coal imports climbed above the trailing 12-month average in May, and remained above the average in June and July. China’s imports of both copper and coal are expected to remain strong for the balance of the year. Imports of iron ore are up 8 percent over last year, which is consistent with the 9 percent growth in China steel production. Although iron ore inventories have increased in tons, they remain near their historical average in days of supply.
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