May 30, 2013 / 11:34 AM / in 4 years

UPDATE 2-Joy Global cuts forecast as miners slash spending

* 2nd-quarter adj EPS $1.73 vs estimates $1.56

* Cuts 2013 EPS outlook to $5.60-$5.80 from $5.75-$6.35

* 2nd-quarter orders fall about 8 percent

* Shares down 2 percent in premarket trading

By Bijoy Anandoth Koyitty

May 30 (Reuters) - Mining equipment maker Joy Global Inc reported lower second-quarter results and cut its earnings outlook for the full year, as a fall in commodity prices forces miners to slash capital spending.

Miners around the world are under intense pressure to cut costs as they contend with volatile commodity prices, rising wages, labor unrest and lower-grade ores.

Joy Global shares were down 2 percent in trading before the bell. They closed at $55.08 on the New York Stock Exchange on Wednesday.

The company said it expects customers to deploy capital expenditure for mining equipment on a selective basis.

“They will do so to rebalance their mine portfolio by adding assets that have quick returns and which will operate low on the global cost curve,” Chief Executive Mike Sutherlin, scheduled to retire at the end of this year, said in a statement.

The company said orders fell more than 8 percent in the three months ended April 26 -- their fifth straight quarterly fall -- hurt by lower demand for its surface mining equipment.

“Orders will need to improve if Joy is expected to achieve their 2014 goal of flat revenues,” Jefferies & Co analyst Stephen Volkmann said in a client note.

Joy Global’s results follow a disappointing quarter reported by mining equipment giant Caterpillar Inc, which also cut its 2013 profit forecast.

A weaker-than-expected recovery in China, the largest market for companies like Joy Global and Caterpillar, and the euro zone struggle have hurt the demand for commodities globally.

China is the world’s top buyer of copper and iron ore, but recent disappointing manufacturing data has raised concerns that its tepid import appetite could worsen a global supply surplus and weaken prices.

Global miners such as BHP Billiton have put billions of dollars worth of mines, projects and aluminium operations up for sale as they look to slash costs, cut debt and focus on their highest returning assets as commodity prices slump.


Joy Global cut its earnings forecast for the year to $5.60-$5.80 per share from $5.75-$6.35.

The company also trimmed the top end of its revenue outlook to $5.0 billion from $5.2 billion. The low end of the forecast remained unchanged at $4.9 billion.

Earnings for the quarter ended April 26 fell 15 percent to $181.6 million, or $1.69 per share, from a year earlier. Excluding items, the company earned $1.73 per share.

Revenue fell 11.7 percent to $1.36 billion.

Analysts on average had expected earnings of $1.56, excluding items, on revenue of $1.28 billion, according to Thomson Reuters I/B/E/S.

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