Mining equipment manufacturer Joy Global’s shares have had a significant increase on the back of service sales increases and strong cost cutting measures.
Its stock was up 8.6 per cent at US$18.13, although the company expects its sales for this year to be lower than the previous US$2.4 – US$2.6 billion outlook.
The company’s adjusted earning are also forecast to be toward the lower end of a prior announcement of between 10 to 50 cents per share.
More than half of the company’s revenue is generated from coal miners, and these have been hit hard by decreasing customer demand. In the last quarter it has also recorded a loss of US$15.3 million from continuing operations, or 16 cents per share, in contrast to the US$56 million profit, or 57 cents per share, in the year before.
Despite the loss, and the company’s cost cutting measures involving the closure of some operations and the axing of employees in Rockhampton and Milwaukee, their recent results have exceeded expectations at Wall Street.
CEO and president of Joy, Ted Doheny, said, “Some positive signs have emerged in recent months; however, the mining industry continues to face headwinds from oversupplied commodities and reduced cash flows for most producers.”
“We are now targeting over US$100 million of year-over-year cost reductions in fiscal 2016.”
Joy also recorded a 17 per cent drop in sales of underground mining equipment from US$438 million last year to US$362 million however surface equipment only fell by one per cent, from US$344 million to US$340 million.
Their OEM bookings increased by 12 per cent, while they had a 14 per cent decrease in service bookings.
The company recently shifted its focus from a dependence on coal mining to rock mining, particularly copper, following year on year falls in revenues.