Joy Global 3Q profit falls, but mining equipment maker’s orders surge prompting outlook boost

Joy Global 3Q net income slips, raises forecast

NEW YORK — Mining equipment maker Joy Global Inc. said Wednesday net income slid nearly 5 percent in the third quarter as sales slipped, but raised its 2010 forecast on a surge in new orders.

Developing nations continue to press for raw materials, driving the global economy at a “more measured and sustainable pace,” the company said. New orders jumped 51 percent in the period.

The company, based in Milwaukee, also said that some of its customers have boosted spending plans based on long-term mine expansion projects leading it to project that miners’ 2010 capital spending budgets will rise 30 percent from 2009 levels, above its earlier expectation for a 25 percent rise. Next year, Joy Global said it expects miners to boost capital spending by about another 10 percent.

Joy Global’s forecast may bode well for the broader economy. Its equipment is used to mine coal, which is used to manufacture steel and to fuel coal-fired power plants. The company said it expects demand to increase for all commodities, especially coal and copper, as the global economy pulls itself from recession.

It noted that the U.S. coal market appears to be improving, driven by an increase in industrial power demand. Elsewhere, steel production has slumped in both China and the U.S. While this may push coal and iron ore prices lower, they currently remain higher than they were last year, the company said.

The company reported earnings of $118.5 million, or $1.13 per share, for the third quarter, compared with $124.3 million, or $1.21 per share, a year earlier. Revenue fell 11 percent to $850 million from $956.4 million. The results beat Wall Street’s profit expectation of $1.03 per share, but missed its revenue estimate of $877.4 million, according to a Thomson Reuters poll.

Shipments declined more than the company expected, in part, due to extended lead times for several critical components as its suppliers’ inventories weren’t robust enough to keep up with demand.

“These are ramp up and not capacity issues, and we should see most of this made up in our fourth quarter,” the company said. “We are also working with our suppliers to improve their visibility and response to our view of the markets ahead.”

Joy Global increased its forecast for 2010 net income to between $4.10 and $4.15 per share. It previously expected $3.85 per share to $4 per share.

Shares rose $3.62, or 6.4 percent, to close at $60.16.