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.