Joy Global sees subdued mining investment in 2017

Joy Global shares drifted lower after it posted its fiscal third quarter results, falling short of analysts´ estimates on a combination of challenging conditions in emerging economies and marginal growth in developed ones.

Adjusted earnings were at 10 cents per share, whereas the mining machine producer was expected by Wall Street to reach 12 cents per share. The company´s third quarter EPS included 10 cents per share in extraordinary charges.

Revenue for the company fell by 26% to $586.6m as weakening demand for its shovels, conveyor belts and drills continued.

The Milwaukee-based firm recently agreed a deal to be taken over by Japanese company Komatsu for $2.9bn. As a result, CEO of Joy Global Ted Doheny has said the company will not be providing a full-year outlook on a quarterly basis, nor would it hold a conference call to discuss its results.

The majority of Joy's profits emanate from the US coal industry, which has faced pressure in recent years from factors such as more closely regulated environmental practices.

Total bookings have fallen by 17%, and orders for original equipment from the company dropped 46%.

"While the recent increase in certain commodity prices is positive, the outlook remains tepid and the financial condition of our customers is challenged, which will continue to impact both the timing and level of our incoming orders through 2017," said Doheny.

Donehy referenced current projections pointing towards a nearly 10% year-on-year decline in global mining equipment capital spending in 2017.

The company referenced forecasts for copper prices to likely remain range-bound between $2.00 and $2.40 per pound over the following two years, before the market entered into a deficit in 2018.

US coal markets on the other hand were slowly re-balancing, Joy said.

In parallel, global steel production had benefitted in the second quarter from seasonal construction patterns "as well as global stimulus programmes".

Conditions in iron ore markets had improved in the last two months, the manufacturer said, with prices expected to average $50 a tonne in the second half of the calendar year as new seaborne supply reached the market.

"Certain commodity prices have recently improved. However, this development has been driven more by supply rationalization as opposed to strengthening demand and should be viewed in that context."

As of 1557 BST the shares were down 0.07% to $27.28.