Cliffs’ Q2 revenues remain flat y/y

JOHANNESBURG (miningweekly.com) – NYSE-listed iron-ore producer Cliffs Natural Resources’ second-quarter consolidated revenues for 2016 remained relatively flat at $496-million, compared with the prior year's second-quarter revenues of $498-million.

The company recorded a net income of $30-million from continuing operations for the quarter under review, compared with a net loss from continuing operations of $38-million recorded in the prior-year quarter.

Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) for the quarter was $102-million, compared with $65-million reported in the second quarter of 2015. Cliffs also reported depreciation, depletion and amortisation of $27-million in the second quarter.

CEO Lourenco Goncalves, nevertheless, seemed optimistic about this quarter’s results, noting that Cliffs had finalised the renewal of its multiyear supply agreement with ArcelorMittal in the period. “This deal is a win-win for both Cliffs and ArcelorMittal, and demonstrates the strength of the Cliffs franchise,” he said, adding that the company negotiated a low-cost power agreement with Minnesota Power that put cash on the balance sheet.

Meanwhile, Cliffs sold 4.1-million long tons of US iron-ore pellets in the second quarter – a 2% decrease when compared with the second quarter of 2015.

The company attributed this decrease to the termination of a customer contract, largely offset by a new customer arrangement.

Cliffs also reported that cash production cost per long ton in US iron-ore was $46.32, down 17% from $56.06 in the prior year's second quarter.

This decrease was driven by improved maintenance practices involving condition-based monitoring, lower diesel fuel, lower natural gas rates, and lower employee-related costs.
Cliffs’ total debt at the end of the second quarter  was $2.5-billion, compared with $2.9-billion at the end of the prior-year quarter.

At the end of the second quarter of 2016, Cliffs had net debt of $2.3-billion, compared with $2.6-billion of net debt at the end of the second quarter of 2015.

During the period under review, Cliffs also received $31-million in cash as part of a long-term purchased power arrangement with Minnesota Power. The company also paid off the remaining balance of the outstanding equipment loans of $23-million.

Capital expenditure (capex) during the quarter was $10-million, a 47% decrease on the $19-million of capex spent in the second quarter of 2015.