Mining equipment maker Joy Global Inc (JOY.N) cut its 2012 outlook for the second time this year as it expects low demand for coal to hit sales of its giant shovels and draglines.
The disappointing outlook sent shares of Joy Global down as much as 6 percent and dragged the stock of larger rival Caterpillar Inc (CAT.N) down 1 percent.
Coal producers across the world have cut back on output to cope with falling demand, in turn reducing demand for Joy Global's mining equipment.
While slowing growth in China and Europe has reduced the demand for coal, low natural gas prices in the United States have prompted power producers to move away from the commodity.
Joy Global said it would take a couple of years for power producers to return to coal as natural gas prices still hover around their lowest level in a decade.
Joy Global said its customers were holding back on spending this year and expects capital budgets to remain flat the next year as many large projects get pushed beyond 2013.
"Although the U.S. market has progressed in line with our expectations, the deceleration of China demand has deteriorated international markets more quickly and severely than previously expected," CEO Mike Sutherlin said.
Demand for coal in China, the world's top consumer of the commodity, has also been hit as the country steps up hydro-power production.
Joy Global said total bookings for the third quarter fell 25 percent to $1.08 billion.
The company expects fiscal 2012 adjusted earnings to be between $7.05 and $7.20 per share, down from its prior outlook of $7.15 to $7.45 per share.
It also cut its 2012 revenue forecast to between $5.45 billion and $5.55 billion, from $5.5 billion to $5.7 billion.
"We expect the (Joy Global) stock to test lows in the high $40s, and further consolidate, as investors debate the merits of owning more-diversified capital goods stocks," William Blair analyst Lawrence De Maria said.
Net income rose to $193.5 million, or $1.81 per share for the third quarter, from $173.1 million, or $1.62 per share, a year earlier.
The company earned $1.82 per share from continuing operations, compared with $1.88 per share, according to Thomson Reuters I/B/E/S.
Net sales rose 22 percent to $1.39 billion, below expectations of $1.42 billion.
Joy Global shares, which have fallen about 30 percent this year, were down nearly 5 percent at $50.88 in morning trading on the New York Stock Exchange.
(Reporting by Megha Mandavia in Bangalore)