Bucyrus 3Q Profit Up 43% At $92 Million; New Orders Down 36%

Bucyrus International Inc.’s (BUCY) third-quarter profit rose 43%, but orders for the company’s mining equipment fell sharply as customers dialed back their purchases in the wake of lower prices for mined commodities.

The South Milwaukee company’s third-quarter income largely originated from orders placed during the commodities bubble. Net income in the quarter climbed to $92 million, or $1.21 a share, compared with $64.1 million, or 85 cents a share a year earlier. Sales in the quarter grew 5% to $675.8.

Wall Street analysts polled by Thomson Reuters expected the company to earn 86 cents a share on revenue of $623.4 million. The company’s gross profit margin increased to 33.1% from 28.2% a year earlier.

New orders for equipment, repair parts and service totaled $627.5 million in the quarter, down 36% from the same period a year earlier. For the first nine months of the year, orders are down nearly by 50% from 2008.

The backlog of orders the company expects to fill in the next 12 months continues to decline as well, falling 24% from the end of 2008 to $1.30 billion on Sept. 30.

Because of the long lead times needed to assemble Bucyrus’ giant shovels, drills and underground mining machinery, new orders and the order backlog are closely watched indicators of the company’s business outlook.

Mining companies have been postponing mine expansions and equipment purchases since prices for coal, iron ore, copper and other commodities fell from their record highs last year under pressure from the slowing global economy.

Third-quarter orders for new surface mining equipment dropped 47%, while new underground mining equipment orders plunged 56%. The lone bright spot in orders was a 17% increase in orders for parts and service for surface mining machinery that the company attributed to customers in Australia.

Bucyrus’ underground mining business was its best performing segment in the quarter, with sales increasing 18% from a year earlier and operating income climbing 82%.

The company said replacement of long wall mining equipment in the U.S. and Czech Republic drove sales higher, along with rebuilding Bucyrus equipment in underground mines in Australia.

Surface mining machinery sales, meanwhile, dropped 7% in the quarter, primarily from lower sales of electric mining shovels.

Bucyrus’ stock Thursday closed down 0.12%, or 5 cents, at $42.53 a share. Bucyrus set a 52-week high Wednesday, closing at $42.58.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

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