Joy Global posts profit on cost reductions

June 2, 2016

For the first time in four quarter, Joy Global reported a rise in bookings. The company reported a surprise quarterly adjusted profit and saw its shares shoot up as much as 14 percent on the news.

However, amid the good news the company also reported a loss of $9.8 million, or 10 cents per share, for the quarter that ended April 29, compared with a profit of $56 million, or 57 cents per share, a year earlier.

Joy posted revenue of $602 million in the recent three month period, down 26 percent from $810 million in the second quarter of 2015.

Joy Global, like larger rival Caterpillar Inc, has been cutting costs as plunging commodity prices and slowing growth in markets such as China, the world's top copper consumer, reduced demand for its giant shovels and draglines.

However, the company acknowledged that mixed economic signals, primarily from China, suggest that there could be a possible near-term improvement in economic output, Reuters reported.

Caterpillar in April had indicated that demand for construction equipment from China was improving.

Joy Global has noted some signs of life in China, which is a positive for the copper market, J.P. Morgan Securities analysts wrote in a note.

Bookings for the Milwaukee, Wisconsin-based company rose 24 percent sequentially in the latest quarter. Bookings last rose in the second quarter of 2015, when it increased 6.4 percent on a sequential basis.

Revenue fell to $602 million from $810.5 million. Joy Global has cut jobs and lowered production among other measures to try to adapt to slowing demand.

The company said it now expected 2016 sales at the lower end of its previous outlook of $2.4 billion-$2.6 billion. Adjusted earnings were also pegged at the bottom end of its previously expected range of 10-50 cents per share.


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