Mar. 5--Joy Global Inc. shares climbed almost 11 percent Wednesday after the company posted a quarterly profit, stood by its annual financial outlook and said business prospects in China remain strong.

Milwaukee-based Joy, which makes giant mining shovels, drills and draglines used to dig coal, oil sands and other materials, said fiscal first-quarter net income rose 20.7 percent to $85.7 million, or 83 cents a share, from $71.1 million, or 65 cents, a year ago. Revenue rose 17.9 percent to $754.9 million from $640.3 million.

Joy said it still expects 2009 profit of $3.60 to $4 a share on revenue of $3.5 billion to $3.7 billion.

That's despite a downturn in the mining industry that has resulted in millions of dollars in canceled equipment orders.

Analysts were expecting a 2009 profit of $3.51 a share, before items, on revenue of $3.55 billion, according to Reuters Estimates.

Some of Joy's fortunes are dependent on China.

In a note to clients, Barclays Capital analyst Andy Kaplowitz said a steady rise in a key Chinese manufacturing index signals a possible economic recovery in the country that could benefit the mining industry.

"We think any pick-up in the Chinese economy toward the end of 2009 could go a long way in stabilizing commodity demand," Kaplowitz noted.

In a conference call with analysts, Joy executives said their P&H mining equipment factory in China is in "ramp up" phase. With that factory running, and another Chinese partner, the company will eventually be able to deliver mining shovels made in China.

"This gives us a key advantage in the local China market and a diversified manufacturing base to better serve the global markets," Joy President and CEO Mike Sutherlin said in the conference call.

Company executives have said they will take production out of factories that are on the bottom of the performance list.

"We have built up a significant investment in China, and we will expect China to do very well as we re-evaluate where we put production," Sutherlin said.

Joy had $161 million in canceled equipment orders in the recent quarter as mining companies pulled back on projects because of fallen commodity prices.

The cancellations were disappointing but not unexpected, according to Sutherlin.

"And the cancellations have been in conjunction with a series of other drastic actions taken by customers. In these cases, I do not think it's effective or productive to pursue lengthy legal action for recovery."

There's also another reason for not enforcing "no-cancellation" clauses in equipment contracts.

"The commitments and goodwill we received in these settlements will pay strong returns later, especially considering that all of our business is with repeat customers," Sutherlin said.

Orders for Joy aftermarket parts increased 13 percent in the quarter as mine operations spent more on equipment they already own. Joy, however, expects 2009 booking rates for its original equipment to remain below 2008 levels.

"The aftermarket will be critical to managing through the uncertainty and volatility we see ahead, especially in the original equipment market," the company said in a statement.

Joy shares closed at $17.55, up $1.70.

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