Joy Global, the US mining solutions company, has released its financial results for Q4 and the 2013 fiscal year.
The results have been impacted by the effects of a difficult market. Bookings with the company have decreased by 19% compared with 2012, and they now stand at US$ 1.1 billion. Sales have decreased by 25% to US$ 1.2 billion. Original equipment orders decreased by 38%, while aftermarket orders declined by 3%. On a sequential basis, current Q4 aftermarket and original equipment bookings increased 19% and 279%, respectively.
Mike Sutherlin, president and CEO of Joy Global, said he was encouraged by the sequential recovery of aftermarket orders, and said that he was pleased with the execution of the company, considering the “difficult market” conditions.
Sutherlin said that the company was almost back to 2012 levels, although some areas of the company were “lagging”. He also was pleased to “see the return of machine rebuilds into the US underground business, which is an important step in the recovery of this market segment.”
“Third and fourth quarter bookings bound a range that we expect to continue in 2014,” Sutherlin said. “Although we booked a major longwall project this quarter, as expected, there are fewer other projects moving forward that meet today’s stringent criteria of operating on the lower half of the global cost curve.”
“With a limited number of projects that can book in time to help 2014, we continue to see both the need and opportunity to lower the cost base in our business. Much of the costs we have taken out so far are structural reductions coming from our operational excellence programme and One Joy Global initiative and this will improve our leverage on market recovery,” Sutherlin added.
Sutherlin said that the company would now take steps to consolidate its surface and underground business and products. Orders for underground mining machinery were reduced by US$ 18.7 million compared to Q4 2014. Bookings for surface mining equipment were down 32%, and original equipment orders were down 62% compared to Q4 2014.
Global bookings and sales
A longwall system was booked in Australia, but original equipment orders decreased in all other regions.
Aftermarket orders decreased 1%, led by strong orders for rebuilds in North America which were offset by declines in China and Eurasia.
Original equipment orders were down in all regions except Eurasia. Aftermarket orders increased in South America and Eurasia, but were offset by declines in all other regions.
Original equipment sales were strong in Eurasia and Africa but were more than offset by declines in all other regions. The company said that the aftermarket sales decline was primarily caused by weak sales in China compared to record sales in China in Q4 2014. Eurasia and Australia were the only regions that showed aftermarket growth from Q4 2014.
Market outlook
During 2013, the major commodity markets served by Joy Global were defined by significant supply surplus after several years of investment in production capacity. At the same time, disappointing economic growth from the developed world, along with a slowing in the emerging markets, resulted in lower than expected demand for commodities.
Despite the challenges faced during 2013, however, Joy Global said it remained confident going into 2014. “Signs are emerging that the Eurozone is beginning to recover from a two-year recession, while growth in China rebounded to 7.8% in Q3, indicating that full-year growth targets should be met,” the company said in a statement.
Adapted from press release by Sam Dodson