The mining industry is not in good health. This has taken a toll on Joy Global (JOY, Financial), which is trying to play defensively in a challenged market. However, the mining company is showing some signs of stabilization due to improvement in order rates. The recent results indicate that Joy Global is aggressive about its growth and is delivering better operational efficiencies. The company is making significant investments in its key strategies in order to make a comeback.
Making positive moves
Moreover, the weak commodity market is giving some good chances to Joy Global to improve its position. Joy Global is in a good position to help its customers achieve the lowest total cost of ownership. Given the challenging market conditions, Joy Global has also come up with new mining methods that will help the company drive its productivity and also enhance safety in the mines.
The company is also focused on cost-cutting initiatives that will help it to improve its margins. This will also lead to a ramp up in production. Joy Global is expecting these new products and system development to create further growth opportunities for its business in the future. In addition, the recovering economy is presenting some bright opportunities for the company. The global growth is expected to increase by 3.5% which is a good sign. With this growth Joy Global is expecting good improvement in its end markets. However, some regional headwinds might be a challenge for it for some time but the overall prospects of the company appears bright.
A rebound in the cards
However, besides these headwinds, the company is seeing a rebound in the commodity demand. It is seeing this demand strengthening which is evident by global growth readings at a three-year high. In addition, Joy Global is laser focused on delivering best services to the customers. The company is mainly focused on highest utilization and efficiency of equipment which is a critical aspect to its customers. Joy Global wants to strengthen its service capabilities and for this it is investing aggressively in this space to hold a good position globally. The company is expecting good improvement in order booking and it expects it to continue in the 2015, strengthening its long-term prospects which will help Joy Global to improve its market share in future.
However, Joy Global might face challenges due to soft coal production. This is also added on by the weak export opportunities and cooler-than-normal summer. The coal prices are declining and are at their lowest levels. This is expected to put pressure on the producers. But the steel production is expected to ramp up also; with the recovering economy, the company is expecting the steel pricing to improve which will drive the demand up.
The copper market is also a potential market for Joy Global, and the company is expecting strength in both business activity and underlying fundamentals of the copper market. Joy Global is expecting Copper to return to a deficit; it is forcing good long-term investment for those companies who are well positioned on the cost curve.
Conclusion
Finally, Joy Global wants to gain market share and for this it has undertaken a share repurchase program, which is mainly focused on improving shareholders' wealth. This will attract investors. Also, due to positive signs, Joy Global has posted an upbeat outlook for the coming fiscal year. Hence, there is no doubt that the company is gradually improving its business that could help it deliver strong long-term growth.
