Joy Global’s 2Q16 revenues
Joy Global’s (JOY) fiscal 2Q16 revenues came in at $602 million, which was below the analyst estimate of $606 million. When compared to the second quarter of 2015, fiscal 2Q16 revenues declined by 26%. Revenues were unfavorably impacted by a $24 million loss from foreign currency translation, a $35 million decrease from original equipment, and a $22 million decrease from service sales.
Underperformances for JOY can be attributed the mining industry, which has been hit hard by a reduced mining capital expenditure and an oversupplied commodities market. Commodity prices on the whole have been under pressure for the past few quarters.
Joy Global’s segmental overview
In JOY’s Underground Mining segment, revenues declined by 19% to $343 million in 2Q16 from $424 million in 2Q15. In fiscal 2Q16, this segment contributed ~54.6% to the company’s total revenues but incurred an operating loss of $20.8 million, with an operating margin of 6%.
In the company’s Surface Mining segment, revenues declined by 33% to $285 million in fiscal 2Q16, from $423 million in fiscal 2Q15. In fiscal 2Q16, this segment contributed 45.4% to the company’s total revenues, and its operating profit stood at $35.6 million with an operating margin of 12.5%.
Caterpillar (CAT), Terex (TEX), and Illinois Tool Works (ITW) are among the other major companies in the mining equipment industry. By comparison, CAT’s 1Q16 revenue declined by 25.2% on a yearly basis. TEX’s and ITW’s 1Q16 revenues declined by 4.6% and 2.0%, respectively, on a yearly basis.
Notably, JOY is a part of the WisdomTree SmallCap Earnings ETF (EES) and accounts for 0.89% of the fund’s total holdings. Investors in this ETF could benefit if JOY surpasses its operational targets set for 2016.
Now let’s take a look at JOY’s operating cash flow.