Mining equipment manufacturer Bucyrus
To the contrary, Bucyrus hasn't lost a step, and recently breathed new life into its lungs with the $1.3 billion purchase of the mining equipment segment from struggling multi-tasker Terex
Bucyrus released year-end earnings results this week, with a 34% increase in net earnings to $312.7 million. Sales increased only marginally to $2.65 billion, with the difference reflected in a marked improvement in gross margin from 27.2% to 30.4%. As miners continue to rationalize purchases in this uncertain economic climate, orders of new equipment have given way to a surge in demand for aftermarket parts and service to fix existing equipment. As I have noted previously, profit margins in aftermarket parts are generally higher for manufacturers like Bucyrus, just as they are for automakers like Ford
Bucyrus worked its way through 25% of its oversized order backlog during 2009 -- and new orders are still coming in at a snail's pace (down 43% in 2009) compared with pre-crisis levels -- but the seeds of change are being sown in coal as we speak.
While Bucyrus earns the nod for best-positioned manufacturer following the Terex deal, its nearest remaining competitor -- Joy Global
In contrast to Bucyrus' youthful swagger, Terex continues to suffer from stagnant demand for its more construction-sensitive business segments. Terex posted a wider fourth-quarter loss than analysts had feared, and its loss for all of 2009 was $4.39 per share. The company is focused on completing factories in India and China to fuel its eventual recovery, but I continue to view the mining equipment specialists as the cream of the heavy equipment crop.
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Fool contributor Christopher Barker is the Nat King of Coal and the wild boar of iron ore. He can be found blogging actively and acting Foolishly in the Motley Fool CAPS community under the user name TMFSinchiruna. He tweets. He doesn't own shares in the companies mentioned. Ford Motor is a Motley Fool Stock Advisor pick. The Fool owns shares of Terex. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.