EmailStory Stocks®
Archive
Last Update: 29-Aug-12 09:13 ET
Joy Global shares decline by nearly 3% following miss on earnings and lowered guidance
Joy Global (JOY $51.58 -1.56) reported third quarter earnings of $1.82 per share, ex items, $0.08 worse than the Capital IQ consensus of $1.90, while revenues rose 22.2% year/year to $1.39 billion versus the $1.42 billion consensus. The company lowered fiscal year 2012 EPS guidance; sees FY12 EPS to $7.05-7.20 ex items, from prior guidance of $7.15-7.45 vs $7.30 consensus. The company lowered FY12 revenue guidance to $5.45-5.55 billion from prior guidance of $5.5-5.7 billion versus the $5.56 billion consensus. Bookings decreased 25 percent to $1.1 billion in the third quarter of fiscal 2012...Including $20 million of fourth quarter restructuring charges, fiscal 2012 earnings per fully diluted share will be between $6.92 and $7.07."
Global Economy Commentary: The demand for commodities has slowed, adjusting to weaker global economic growth. Recent economic data is mixed, but is generally consistent with low U.S. growth, Europe contracting and China decelerating. China's economy continues to decelerate. Demand for electricity is up 3 percent in May of 2012, compared to a growth rate of 10 to 11 percent a year ago. In addition to the effect of a slowing economy, recovery in hydropower generation has further reduced coal demand. Coal production in China has continued to increase as demand has slowed, further depressing prices. As prices dropped below $100 per tonne, imported coal gained an advantage over domestic production, and stockpiles at the domestic transfer point of Qinhuangdao increased and approached capacity.
Outlook: "We are also encouraged to see signs of demand stabilization in China. Although this limits growth until broader economic recovery is realized, it will also limit the downside. IMM was adversely impacted by lower order rates in June and July as domestic stockpiles grew, and we expect this to continue until the Chinese domestic market returns to balance later this year. At that point, we expect IMM to return to growth rates more consistent with those earlier this year. In addition, we expect upside from integration programs focused on technology transfer, operational excellence, and aftermarket development...As we look forward, we see our fiscal year 2013 revenues to be flat to down slightly under a continuation of current market conditions. We will use this period as an opportunity to accelerate our strategy by consolidating capacity in traditional markets and expanding our position in those markets where we anticipate growth over the longer term. We expect to incur additional restructuring costs in 2013 which will further reduce our cost structure, and make sustainable improvement in process efficiency and margins."
Global Economy Commentary: The demand for commodities has slowed, adjusting to weaker global economic growth. Recent economic data is mixed, but is generally consistent with low U.S. growth, Europe contracting and China decelerating. China's economy continues to decelerate. Demand for electricity is up 3 percent in May of 2012, compared to a growth rate of 10 to 11 percent a year ago. In addition to the effect of a slowing economy, recovery in hydropower generation has further reduced coal demand. Coal production in China has continued to increase as demand has slowed, further depressing prices. As prices dropped below $100 per tonne, imported coal gained an advantage over domestic production, and stockpiles at the domestic transfer point of Qinhuangdao increased and approached capacity.
Outlook: "We are also encouraged to see signs of demand stabilization in China. Although this limits growth until broader economic recovery is realized, it will also limit the downside. IMM was adversely impacted by lower order rates in June and July as domestic stockpiles grew, and we expect this to continue until the Chinese domestic market returns to balance later this year. At that point, we expect IMM to return to growth rates more consistent with those earlier this year. In addition, we expect upside from integration programs focused on technology transfer, operational excellence, and aftermarket development...As we look forward, we see our fiscal year 2013 revenues to be flat to down slightly under a continuation of current market conditions. We will use this period as an opportunity to accelerate our strategy by consolidating capacity in traditional markets and expanding our position in those markets where we anticipate growth over the longer term. We expect to incur additional restructuring costs in 2013 which will further reduce our cost structure, and make sustainable improvement in process efficiency and margins."
