Joy Global Inc., the mining- equipment maker that came out of bankruptcy during the last U.S. recession, may increase profit 30 percent in 2008 as the coal industry booms amid a new economic slump.

The Milwaukee-based company's shares have risen 53 percent in the past 12 months as record eastern U.S. coal prices and growing orders from China and India spur increased spending by miners. The stock added 5 percent March 6 after Chief Executive Officer Mike Sutherlin lifted his profit forecast. Analysts say that may presage bigger gains.

Coal-fired power plant construction is at a 25-year high and exports of the fuel are forecast to rise 36 percent in 2008. This has prompted mining companies to announce 1,100 new projects worth $308 billion in 2007, a 50 percent gain from 2006, said Magnus Ericcson, an analyst at Stockholm-based Raw Materials Group. With orders climbing 54 percent in the first quarter to $870 million, Joy Global is adding factory space to build electric mining shovels and roof supports.

``Mining starts have been down and underinvested for the last 10 years,'' said Brian Rayle, an analyst with FTN Midwest Research Securities in Cleveland. ``This is a pure mining play. They stand to benefit the most.'' Rayle rates the stock a ``neutral.'' Seven analysts have a ``buy'' rating, eight recommending holding the shares and none says to sell.

A Bloomberg analyst survey projects the company's 2008 profit will increase 30 percent to $365 million as sales gain 29 percent. The shares fell 25 cents to $66.21 at 4 p.m. New York time in Nasdaq Stock Market composite trading.

Barry Bannister, an analyst with Stifel Nicolaus & Co. in Baltimore, says the shares will reach $95 in the next year. Even with its gains, Joy Global is 30 percent cheaper than Bucyrus International Inc., a smaller competitor.

`More Efficient'

While Caterpillar Inc. and Terex Corp. also make backhoes and cranes, Joy Global and Bucyrus build only mining equipment and may benefit more from the coal boom.

``Joy's the more efficient operator,'' said Paul Bodnar, an analyst with Independence, Ohio-based Longbow Research. He has ``neutral'' ratings on the two companies. ``Joy's underground side of the business can benefit, and their aftermarket parts, too.''

Once known as Harnischfeger Corp., which declared bankruptcy in 2000 as weak metal prices trimmed sales, the company reorganized under its current name a year later and has more than doubled revenue since then. In December, Joy Global completed its acquisition of Continental Global Inc., a maker of mine-conveyor systems.

Profit Underground

Joy Global derives about 65 percent of revenue from coal producers. Sales last year totaled $2.55 billion, five years into what Sutherlin expects to be a 20-year expansion as emerging nations industrialize.

The company plans to spend 3.5 percent to 4 percent of sales over the next few years to add capacity for mining equipment in China, India and other emerging markets. That's up from the $12 million, or 2.2 percent of revenue, spent last year.

Joy Global's underground business, which gets 90 percent of revenue from coal projects, has a backlog into 2009. The surface division, which includes shovels, has orders into 2010 and 2011, Sutherlin said in an interview. Original equipment orders had a backlog of $1.9 billion as of Feb. 1.

``We had a capacity increase come online in 2007, and more will come online in 2008 and 2009,'' Sutherlin said. He plans to make 32 electric shovels a year by 2009, up from about 12 two years ago. The shovels can carry as much as 115 tons.

Exporting Coal

U.S. coal miners are expanding as orders picked up in the last months of 2007. Exports may reach 80 million tons this year, from 59 million tons last year, according to a March 7 investor note from Lehman Brothers.

``The U.S. over the past six months has gone from our weakest market to our strongest,'' Sutherlin said.

Australia, China and South Africa, among the world's largest exporters of coal last year, have turned importers as adverse weather and a lack of infrastructure slowed production.

U.S. coal for delivery at the Big Sandy River terminal in West Virginia, a benchmark for supplies in the Appalachian states, climbed 75 percent in the past year to $71-a-ton on March 21. Coal from Wyoming's Powder River Basin, the largest U.S. production area, has gained 66 percent, to $14.50-a-ton. Western coal is cheaper than the Eastern because it costs more to ship to power plants or export terminals and typically contains less energy.

Digging Gold

Joy Global also is benefiting from the rise in metal prices. About 25 percent of the company's revenue is tied to copper mining and 10 percent is linked to other metals, including gold.

Bullion prices reached a record of $1,033.90 an ounce on March 17, and copper traded within 1 percent of its highest level earlier in the month.

Construction projects in developing nations including China have driven demand for copper, used in wires and other building materials, even as U.S. orders have dropped amid the worst housing slump in 25 years.

``Everyone's been concerned about surplus inventory, but that hasn't happened,'' Sutherlin said. ``China alone should add 4 million tons of demand'' by 2012.



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