Cliffs reports dip in 1st Q earnings
CLEVELAND – Cliffs Natural Resources Inc. recently reported first-quarter revenues of $1.1 billion for the period ended March 31.
Revenues were down $72 million, or 6 percent, from the same period the previous year. Cliffs officials said the lower revenues were driven by a 10 percent decrease in global iron ore sales volumes, which contributed to a 2 percent decrease in cost of goods sold to $903 million.
“We are headed in the right direction in 2013,” Joseph Carrabba, Cliffs’ chairman, president and chief executive officer, said. “During the first quarter, we took deliberate measures to reduce our balance sheet leverage and improve our cash position. Also, our operating teams are taking a pragmatic approach to reduce operating costs across the board. We expect these initiatives will position the company to successfully manage through volatile pricing environments.”
During the quarter, Cliffs reported net income attributable to common shareholders of $97 million, or 66 cents per diluted share, compared with $376 million, or $2.63 per diluted share, in the first quarter of 2012.
Cliffs said first-quarter 2013 U.S. iron ore pellet sales volume was 3.1 million tons, compared with 3.4 million tons in the first quarter of 2012. The decrease was primarily driven by lower year-over-year volume to one customer due to its bankruptcy in May 2012. Cliffs also said first-quarter U.S. Iron Ore sales volume is historically lower compared with other periods due to seasonal shipping constraints on the Great Lakes.
Looking ahead, Cliffs said it anticipated healthy end markets for its products. In the first quarter of 2013, China’s annualized crude steel production achieved record levels, while utilization rates in North American remained stable. The company expects pricing for the commodities it sells to remain volatile, with the potential to significantly decrease or increase at any time.
For 2013, Cliffs is increasing its sales volume expectation to 21 million tons from its previous estimate of 20 million tons. The increase is primarily driven by increased pellet demand from U.S.-based customers. Cliffs is maintaining its expected production volume in U.S. iron ore of 20 million tons.