Rinehart’s Hancock weighs $3.3 billion iron ore mine project
Hancock acquired a 51% interest in the Mt Bevan project from Legacy Iron Ore Ltd. and Hawthorn Resources.
First Caterpillar (NYSE:CAT), now Joy Global (NYSE:JOY). As mining companies take a hit from low commodity prices, so do mining equipment makers. Joy Global released third-quarter earnings on Wednesday showing a 36% drop in quarterly orders and warning of a sharp revenue drop this year and next.
The heavy machinery supplier is largely dependent on sales to coal miners which account for two-thirds of revenue. As coal producers cut spending amidst low prices and oversupply – with BHP most recently announcing it was “finished” with coal for the time being – Joy Global may be in for a rough ride.
The company’s shares had fallen 3.5% by mid-afternoon Wednesday after losing as much as 6% early morning. And the losses were contagious: Caterpillar also shed nearly a percentage point.
Revenue contributions from the US fell to $526.4 million – a 10.9% drop compared to last year. Meanwhile the rest of the world bought 0.5% less of the company’s product.
The supply surplus, according to a note by the company’s CEO, has “migrated” from the US to international markets which will translate into more losses next year.
Joy Global already began cutting costs last year as it saw the effects of declining coal prices. Now the firm says revenues could drop 20% in 2014 in addition to this year’s anticipated losses, Reuters reports.
But analysts were not too disappointed with the results. Adjusted earnings per share of $1.70 were 25% higher than some estimates of $1.36. Net sales of $1.32 billion were also better than the predicted $1.17 billion.
The company has left its 2013 revenue forecasts unchanged at between $4.9 and $5 billion.
