Jump for Joy Global Inc. (JOY): General Electric Company (GE), Caterpillar Inc. (CAT)

The mining industry faced a tough market in 2012 due to the global economic slowdown. With Joy Global Inc. (NYSE:JOY) strongly entrenched in this industry, they were hit hard, suffering a 16.13% drop in their stock. With strength returning and economic indicators pointing in a favorable direction, however, they have the potential to push back towards their previous highs.

Joy Global Inc. (NYSE:JOY) is a worldwide provider of mining equipment and solutions. They manufacture and market new equipment, as well as offering after-market parts and services. The largest use of this equipment is for the mining of coal, copper, iron ore, gold, and oil sands. Overall, Joy Global Inc. (NYSE:JOY) has operations on every continent besides Antarctica.

Joy Global’s 2012 Summary

Net sales for 2012 rose to $5.66 billion, a 28.5% increase from 2011
Underground mining machinery sales rose 20.6%
Surface mining equipment sales rose 39.7%
Operating income rose 27.4% to $1.2 billion
Original equipment sales rose 51.8%
After-market sales rose 12.7%

The United States was a difficult area for Joy Global Inc. (NYSE:JOY) in 2012. The coal market was beaten down mainly because of the drop in natural gas prices. Cheap natural gas prompted companies to switch from coal to generate electricity.

2012 in review:

Coal production decreased by about 70 million tons, or 7%, for the year
Coal-fired generation fell 13% for the year, but this was mainly over the first 4 months
From April to November, this increased 10% as natural gas prices rose

The coal market is expecting gains to continue in 2013 due to higher natural gas prices, as well as improving economic activity. Exports grew 15% from 2011 and should remain at these levels. 2012 started off bad, but gained steam in the end.

First Quarter and Going Forward

Joy Global Inc. (NYSE:JOY) reported first quarter earnings on Feb. 27. Here are the highlights:

Earnings per share came in at $1.33 versus estimates of $1.14
Revenues were $1.15 billion versus estimates of $1.08 billion
Management backed full year estimates for earnings per share of between $5.75 and $6.35 on revenues of $4.9 to $5.2 billion
The quarterly dividend was maintained at $0.175 per share

Market Outlook

There are several positives for the mining industry going forward. Imports of seaborne thermal coal is expected to increase steadily in China, India, Japan, and Europe. Global steel production is expected to rise in 2013, which means there will be a higher demand for metallurgical coal and iron ore.

The global demand for copper is expected to grow, as production increases are expected in Africa due to the completion of mines, and in China because of their improving economy. All of these factors will be catalysts for overall demand of Joy Global’s products and services.