Cleveland-Cliffs lifts Q3 earnings as US ops shine, Asian segment struggles

TORONTO (miningweekly.com) – US iron-ore producer Cleveland-Cliffs has reported strong third-quarter results for the three months ended September 30, beating analyst forecasts for earnings per share.

The Cleveland, Ohio-based company reported adjusted net earnings, which typically excludes special items, of $0.36 a share, besting Wall Street analyst consensus forecasts calling for earnings of $0.32 a share.

Maintaining an equity listing on the NYSE, Cleveland-Cliffs recorded net income of $53-million in the third quarter, or $0.18 a diluted share, compared with a net loss of $28-million, or $0.12 a diluted share, recorded in the comparable quarter of 2016.

For the third quarter, adjusted earnings before interest, taxes, depreciation and amortisation was $154-million, a 149% higher compared with the same quarter a year earlier.

The company reported a 26% year-on-year increase in consolidated revenues of $698-million, compared with $553-million in the previous comparable period. The cost of goods sold increased 15% to $538-million.

"With the third-quarter numbers in the books, we have already outperformed in three quarters of 2017 the results of the entire 2016. On top of that, during the third quarter, we acquired the remaining 15% of the Tilden mine, and now own 100% of all active and idled iron-ore mining assets in the state of Michigan,” president and CEO Lourenco Goncalves stated, adding that the acquisition would allow Cleveland-Cliffs to become a 20-million long ton pellet supplier in 2018.

The miner’s US iron-ore pellet sales volume in the third quarter of 2017 was 5.9-million long tons, an 11% increase when compared with the third quarter of 2016, boosted by increased customer demand and export sales.

In the Asia Pacific business segment, iron-ore sales volumes fell 20% to 2.2-million metric tons, from 2.8-million metric tons in the third quarter of 2016. The decrease was driven mainly by lower production volumes, a result of operational decisions reflecting current market conditions and quality ore availability, the company advised.

Total debt at the end of the third quarter was $1.7-billion, about $500-million lower than the $2.2-billion total debt at the end of the prior-year quarter. Cliffs had net debt of $1.4-billion at the end of the period, compared with $2-billion in the same quarter last year.

Cleveland-Cliffs advised that full-year sales and production volume forecasts were each reduced by 500 000 t to 18.5-million long tons. The lower forecasts were attributable to a significant reduction in pellet nomination by a large customer, partially offset by increased export sales.

For 2018, Cliffs expects sales and production volumes of 20-million long tons, as a result of the increased capacity from the acquisition of the remaining minority interest in the Tilden mine.

Cliffs' full-year 2017 Asia Pacific iron-ore sales and production volume expectations were each reduced by 500 000 metric tons, to 10.5-million metric tons of sales and 11-million metric tons of output. The reductions were driven by operational decisions reflecting current market conditions and quality ore availability. For 2018, Cliffs expects Asia Pacific iron-ore sales and production volumes of 11-million tons.

The miner's NYSE-listed stock closed down 2.35% on Monday at $6.86 a share.