Joy Cuts Top End of Profit Forecast on Coal Slump, Ukraine

Sep 04, 2014 4:25 pm ET

(Updates with closing share price in fifth paragraph.)

Sept. 4 (Bloomberg) -- Joy Global Inc., the world’s largest maker of underground mining machinery, reduced the top end of its fiscal full-year profit forecast amid cutbacks in the U.S. coal industry and political unrest in Ukraine.

Earnings excluding restructuring costs and other one-time expenses will be $3.15 to $3.30 a share in the year through October, compared with a previous prediction of $3.10 to $3.50, the Milwaukee-based company said today in a statement. The average of 20 analysts’ estimates compiled by Bloomberg was $3.23.

The market for U.S. coal used to generate electricity still faces “challenging conditions” amid cooler-than-normal summer weather and lower exports, Joy said. The price of metallurgical coal, used to make steel, is at a six-year low, and some U.S. producers such as Alpha Natural Resources Inc. have closed or idled mines this year.

In Eastern Europe and Russia, Joy has “seen near-term slowing of activity in the region as a result of the continued depressed pricing of seaborne coal markets and the current geopolitical environment,” Chief Executive Officer Ted Doheny said in the statement.

Joy fell 2.7 percent to $60.51 at the close in New York, the biggest one-day drop since Feb. 25.

The company also revised its full-year sales forecast to $3.65 billion to $3.75 billion, from $3.6 billion to $3.8 billion previously.

Net income dropped to 71 cents a share in the fiscal third quarter ending Aug. 1, from $1.71 a year earlier. Profit excluding one-time items was 80 cents, missing the 84-cent average estimate.

Sales fell to $875.7 million in the quarter from $1.32 billion, missing the $931.3 million average estimate.