More grim news from the coal mining sector as equipment manufacturer Joy Global Inc. reported a lower profit for the third quarter and said orders fell 36 percent as a global oversupply of coal hits demand for its giant shovels and draglines.
Coal producers across the world have cut back on output to cope with falling prices and rising stockpiles, in turn reducing demand for Joy Global’s mining equipment.
China, the top producer of coal, has slashed domestic prices since July to gain market share. Local coal prices have already dropped 14 percent so far this year and could drop further, Business News Network reported.
“We expect the order rate to take a step down from our previous outlook until both demand and commodity pricing improve,” chief executive Mike Sutherlin said.
The company’s orders fell 36 percent to $695 million in the quarter ended July 26.
Joy Global, which gets about two-thirds of its revenue from coal miners, said it was stepping up cost cutting to adjust to the lowered outlook for 2014.
The company maintained its 2013 forecast for earnings of $5.60-$5.80 per share and revenue of $4.9 billion to $5 billion.
Net income fell 5 percent to $183.2 million, or $1.71 per share, in the third quarter from $193.6 million, or $1.81 per share, a year earlier. Revenue dropped 5 percent to $1.32 billion.
Excluding items, Joy Global earned $1.70 per share.
Analysts on average expected earnings of $1.37 per share, excluding items, on revenue of $1.18 billion, according to Thomson Reuters.