Mining slump weighs on Joy Global's profit forecast
(Reuters) - Mining equipment maker Joy Global Inc (JOY.N) forecast 2014 earnings below analysts' average estimate and said it was difficult to predict when a recovery in the mining industry would begin next year, sending its shares down 6 percent.
Joy Global follows rival Caterpillar Inc (CAT.N) in warning about uncertainty over the timing of a recovery in the mining industry, which is reeling from a supply glut that has reduced demand for equipment.
"The takeaway is that the mining business is still relatively weak (and) an upcycle is still elusive," William Blair analyst Lawrence De Maria told Reuters.
Top U.S. coal miners such as Peabody Energy Corp (BTU.N), Alpha Natural Resources Inc (ANR.N) and Arch Coal Inc (ACI.N) have cut their capital expenditure, reducing demand for the longwall shearers, giant shovels and draglines made by Joy Global.
"Until a sustained demand catalyst emerges, we expect our customers will continue to be cautious and selective in deploying capex," CEO-designate Ted Doheny said on Wednesday.
Overall orders fell 19 percent to $1.1 billion in the fourth quarter ended October 25 at Joy Global, which gets about two-thirds of its revenue from coal miners.
Joy Global said it expects restructuring costs of about $15 million in 2014 as it shifts some production closer to end markets such as China.
Analysts said there were signs that Joy Global's aftermarket business was stabilizing ahead of a recovery.
Orders from the business, which includes maintenance and repair services and makes up about half of sales, declined about 3 percent to $711.5 million in the quarter. Original equipment orders fell 38 percent $364.6 million.
Joy Global, which also supplies to miners of copper, iron ore and other minerals, forecast earnings of between $3.00 and $3.50 per share for 2014, below Wall Street's estimate of $3.68.
The revenue forecast of $3.6 billion to $3.8 billion was also largely below analysts' average estimate of $3.8 billion, according to Thomson Reuters I/B/E/S.
In the fourth quarter, net income from continuing operations fell 87 percent to $26.8 million, or 25 cents per share, from $212.4 million, or $1.99 per share, a year earlier.
Excluding a $155 million asset impairment charge and other unusual items, Joy Global earned $1.11 per share, missing analysts' average estimate of $1.12.
Revenue fell 26 percent to $1.18 billion but was marginally above the $1.12 billion analysts were looking for.
Joy Global's shares were down 6 percent at $53.06 in afternoon trading on the New York Stock Exchange. The stock had fallen about 12 percent this year to Tuesday's close.
(Editing by Sriraj Kalluvila)
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