Joy Global Slides on Outlook

underground mining
underground mining

Joy Global Inc. (NYSE: JOY) reported fourth-quarter and full fiscal year 2012 results before markets opened this morning. The mining equipment maker reported quarterly diluted earnings per share (EPS) of $1.99 on revenues of $1.6 billion. In the same period a year ago, Joy Global reported EPS of $1.83 on revenue of $1.34 billion. Today's results also compare to the Thomson Reuters consensus estimates for EPS of $1.91 and $1.42 billion in revenue.

For the full year, EPS totaled $7.13 on revenues of $5.66 billion. Consensus estimates called for EPS of $7.11 on revenues of $5.49 billion.

The company's CEO is cautious about the coming year:

Our entire organization did an outstanding job of catching up on deliveries and giving us an exceptional finish to fiscal 2012. This strong execution will be important as we begin adjusting to the lower volumes that we expect for 2013. We are setting our plans for 2013 on the basis that current market conditions continue. Although there is upside potential in our markets, the timing is uncertain and unlikely to occur until current excess mine capacity is reduced.

The company guided fiscal year 2013 diluted EPS at $5.90 to $6.50 on revenues of $4.9 to $5.2 billion, a sharp decline from 2012 results and below consensus estimates for EPS of $6.73 on revenues of $5.21 billion. Joy Global took a $20 million restructuring charge and expects further charges totaling $25 million in 2013. Including the charges, EPS is forecast at $5.75 to $6.35 for the new year.

There is really no way to paper over Joy Global's troubles, and the company does not really try to. The impact of its acquisition of China's International Mining Machinery early in 2012 hurt Joy Global's performance, and the company expects the acquisition to reverse the declines in 2013. Backlogs are shrinking and the impact of the company's restructuring "will allow us to deliver our target of 34 percent decremental operating margins" in the coming year.

Joy Global's shares are flat in premarket trading this morning, at $57.87 in a 52-week range of $47.69 to $96.00. Thomson Reuters had a consensus analyst price target of around $71.60 before today's results were announced.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Earnings, Industrials, Industry, Metals Tagged: JOY