UPDATE: Joy Global 4Q Profit Rose 18% On Stronger Margins

Joy Global Inc.'s (JOYG) fiscal fourth-quarter earnings rose 18%, as the company benefited from stronger profit margins on its under-ground mining machinery.

The mining-equipment company's results for the quarter and its outlook for 2011 exceeded expectations, triggering a surge in the company's stock price Wednesday. Joy Global was recently trading up 8.2% at $86.83 a share.

"We finished the year with increasing order rates and improving operational and financial results and this will provide momentum into 2011," said Chief Executive Office Mike Sutherlin. said. "The fundamentals in our market are good and the outlook is very positive."

Demand for copper and coal, in particular, is increasing faster than global production capacity, prompting mine operators to revive expansion projects and plans for new mine sites that were shelved in late 2008 when prices and demand for mined commodities collapsed.

"Demand is expected to improve significantly in the next three to five years," Sutherlin said during a conference call with analysts.

Fourth-quarter orders overall rose 48% from a year ago to $1 billion, as orders for new machinery more than doubled and orders for replacement parts climbed 21%. The company noted that the long-suffering U.S. mining industry accounted for much of the increase.

For the fiscal year that started Nov. 1, the Milwaukee company projected earnings of $5 to $5.30 a share on revenue of between $3.9 billion and $4.1 billion. Analysts had forecast $4.79 a share of profit from $3.86 billion of revenue.

During the fourth quarter ended Oct. 29, profit from the company's underground-mining equipment business rose 22% from an 8% increase in sales. Meanwhile, profit on surface-mining equipment increased 12% as sales grew 10%.

Overall in the fourth quarter, Joy Global reported a profit of $146.3 million, or $1.39 a share, up from $124 million, or $1.20 a share, a year earlier. The year-ago quarter included a $6 million gain related to the company's prior reorganization efforts. Revenue from the quarter rose 8.9% to $1.05 billion. Analysts polled by Thomson Reuters had expected earnings of $1.16 on revenue of $923 million.

Construction equipment manufacturer Caterpillar Inc.'s (CAT) plans to acquire Bucyrus International Inc. (BUCY) for $7.6 billion will leave Joy Global as the only pure-play mining equipment maker in the U.S. Sutherlin dismissed suggestions that the combined Caterpillar-Bucyrus operation will provider significantly tougher competition for Joy Global.

"We've built our business to make highly engineered equipment," Sutherlin said. "I think no one does that better than we do. We're well-positioned to distinguish ourselves from the competition."

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

-Tess Stynes contributed to this article.

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