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Mining equipment maker Joy Global (NYSE:JOY) has reported another miserable quarter in terms of net income. The US-based company’s earnings plummeted 87% on last year’s fourth-quarter, reflecting a $155 million impairment charge and a 26% drop in sales.
As mining companies respond to low prices and oversupplied markets by scaling down and halting some operations, the equipment maker has seen fewer and fewer bookings.
Total bookings decreased 19% from last year to $1.1 billion in the last quarter of the year.
CEO Mike Sutherlin said in a statement that the business needs to lower its cost base.
“We have made substantial progress in streamlining our businesses and regions, and are now taking the next step of consolidating our surface and underground businesses and products under the Joy Global brand,” Sutherlin noted.
The company lost more than 6% on its share price after Wednesday’s report. Joy is currently trading at $52.77 per share.
Looking at the full year, Joy’s total booking decreased 23% and net sales shed 12%.
Joy identified several factors that weighed down on its performance: An oversupplied commodities market, disappointing economic growth from the developed world and slowed growth among the emerging markets.
Slight increases in demand have not been able to keep with supply surpluses and the resulting price declines have put serious pressure on miners. Joy expects these factors to continue to drive the closure of high-cost uneconomic mines.
Coal miners account for two-thirds of Joy’s revenue. With many US operations shutting down, weak Chinese demand, oversupply and resulting low prices, the black rock’s troubles are tied closely to that of Joy Global’s.
Looking forward, the company is planning additional restructuring actions and expects lower earnings.
“Even with the projected lower revenue levels, we are confident in our cash generation capability in 2014 …” Executive Vice President Ted Doheny noted in a statement “Our strong cash position heading into fiscal 2014 and solid cash generation during the year will position us to continue to execute on our share repurchase program and provide other opportunities to add value for our shareholders.”
