Joy Global has released its first quarter 2014 results, and shown a large drop year on year for the first quarter.
Quarter on quarter it saw a collapse in net income, dropping 65% between the first quarter periods year on year.
Highlighting the shrinking demand for capital equipment in the mining industry, Joy recorded a 42.7% drop in original equipment orders compared to the first quarter of 2013, with demand falling from US $436.2 million to US $250.1 million.
This fall was felt most keenly in underground equipment, which saw close to a 24% slump in sales, dropping from US $598.8 million in January 2013 to US $451 million this year.
Surface mining equipment did not fare much better, recording a 13.8% decline year on year, with bookings slumping from US $502.9 to US $433.5 million. Joy added that surface mining equipment was hit by an additional US$ 16 million fall due to the impact of foreign exchange compared to last year.
Much of this downward movement was due to decreased demand in Australia and North America, although the machinery did see an increase in bookings across South American, Eurasia and China.
These figures combined to see a huge fall in operating profit for Joy Global.
The manufacturer saw a 61% fall in total operating profit, dropping from US$ 221.2 million in 2013 to US $85.2 million for this quarter.
This is the second straight quarterly drop, after seeing sales drop 26% and bookings down 19% in the December 2013 quarter.
Yet despite the weak start to the year Joy has predicted growth for 2014, in excess of 3.5%.
A major part of this will be the forecasted strengthening in global coal markets.
"While comparison with the first quarter of fiscal 2013 is difficult, I am pleased with our team's execution against plan in what is expected to be our slowest quarter of the fiscal year," Ted Doheny, Joy Global’s president, said.
He went on to say that for the full year 2014 “we still expect revenues to be between $3.6 billion and $3.8 billion”
As part of its strategy to reach this target, Doheny said the company will continue “to move forward on our cost reduction programs which will help mitigate the impact from lower volumes during the year”.
It will also focus on the hard rock space and remains “committed to our long-term strategy of expanding our reach beyond coal into industrial minerals and hard rock”.