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What Were the Key Highlights for Joy Global in 4Q15?

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Joy Global will focus on new products 

In the challenging mining industry, Joy Global (JOY) is focusing on new cost-efficient products like a hybrid excavator. It’s also entering a new area through the acquisition of Montabert to drive growth. The company built its capacity in China to take advantage of lower production costs and to increase domestic sales in China. It will increase its focus on the stable Indian market.

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Joy Global’s revenue and earnings 

Joy Global expects global growth to improve modestly in calendar 2016. However, commodity prices aren’t expected to see any material improvement due to the current over-supplied conditions. The current negative market conditions will continue to strain the cash flows for most mining companies. Joy Global gave a guidance of $2.52 billion for sales and $0.25–$0.23 for adjusted EPS during 2016.

Its 4Q15 bookings were 21% lower year-over-year at $617 million due to a 27% decline in original equipment bookings and a 20% decline in service orders. The decrease in original equipment bookings was led by Latin America and China. The decline in service bookings was led by North America.

Shovel sales are the key driver of sales. Joy Global is the market leader with ~65% of the market share. However, the company hasn’t received any incremental Shovel orders in the last three quarters.

Caterpillar (CAT), Terex (TEX), and Komatsu (KMTUY) are some of the major companies in the mining industry.

Joy Global is part of the SmallCao Earning Fund ETF (EES). It accounts for 0.70% of the total holdings. Investors in EES could benefit if Joy Global delivers operational excellence in a weak and volatile market. EP Energy Corp Class A (EPE) and Atwood Oceanics (ATW) are also among EES’s top ten holdings.

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