Sure management discussed demand concerns, but they were clear that destocking of copper and coal in China and India were basically over. Also, mining companies are better positioned to finance mining projects this time as compared to 2008. Not to mention that companies learned the hard way what happens when long term projects get delayed for a small term economic downturn.
Honestly, what is the logic of delaying a copper mine expected to open in 2013 due to macro economic issues now? Supply remains weak in the commodities sector and it is clear that emerging market demand is nowhere close to peaking. Has anybody seen the lack of infrastructure in India or even the US.
Caterpillar (CAT) also reconfirmed 10-20% sales growth in 2012. Clearly neither CAT nor JOY provided any news that warranted the sharp selloff in the sector on Wednesday. The global economy would have to fall into a recession for the situation to change for this sector.
Otherwise, nothing provided in these reports should've changed investors moods. Both companies talked about robust growth, but provided cautious tones due to the potential economic headwinds.
Details from JOY earnings report:
- Fourth quarter bookings increased 33 percent to $1.4 billion in fiscal 2011, compared to the fourth quarter of last year.
- Operating income increased 31 percent to $296 million on a revenue increase of 27 percent to $1.3 billion. Income from continuing operations was up 33 percent to $195 million, or $1.83 per fully diluted share, compared to income from continuing operations of $146 million, or $1.39 per fully diluted share, for last year’s fourth quarter. ($1.90 excluding LeTourneau charges)
- expect our fiscal 2012 revenues to be between $5.3 billion and $5.5 billion.
- expect to continue to deliver operating leverage of 25 percent, and this will translate into earnings per fully diluted share between $7.00 and $7.40. LeTourneau is expected to contribute $400 million to 2012 revenues and $0.41 to earnings per share. This includes $0.15 of purchase accounting charges, of which $0.08 is expected to continue beyond LeTourneau’s first year,” concluded Sutherlin.
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