Cliffs Natural Resources Inc.
) posted adjusted earnings of 60 cents per share in the first
quarter of 2013, down 29.4% from 85 cents earned in the year-ago
quarter but ahead of the Zacks Consensus Estimate of 32
cents. The adjusted earnings exclude a tax benefit of 6
cents per share.
On a reported basis, Cliffs' earnings were 66 cents per share
compared with $2.63 reported in the year-ago quarter. Weak iron
ore pricing coupled with lower volume hurt Cliffs' earnings in
Sales for the quarter came in at $1,140.5 million, down
roughly 5.9% from $1,212.4 million in the prior-year quarter and
also missed the Zacks Consensus Estimate of $1,226 million.
Decline in global iron ore sales volumes led to reduced sales in
U.S. Iron Ore:
U.S. Iron Ore pellet sales volume decreased to 3.1 million tons
in the quarter from 3.4 million tons in the first quarter of
2012. Lower volumes to a customer due to bankruptcy in May 2012
and seasonal shipping constraints on the Great Lakes led to the
Revenues per ton were up 2% year over year to $119.82 due to
customer mix and favorable provisional pricing settlement. Cash
cost per ton fell 2% to $60.17 due to lower maintenance
Eastern Canadian Iron Ore:
Sales volumes in the reported quarter were flat year over year at
1.9 million tons. Cliffs announced that it will idle the Wabush
Pointe Noire Pellet Plant by the end of second-quarter 2013.
Revenues per ton for the segment jumped 13% year over year to
$131.95, led by favorable provisional pricing settlements, lower
freight rates and a 3% year-over-year increase in seaborne iron
Cash cost per ton fell 4% to $99.41, attributable to lower
cash cost at Bloom Lake Mine primarily due to lower transshipping
costs, reduced demurrage and lower contractor spending.
Asia Pacific Iron Ore:
Sales volumes in the segment slipped 17% to 2.3 million tons due
to vessel timing and the absence of sales volume from Cliffs'
Cockatoo Island operation. Revenues per ton were $117.48, down 9%
from $129.75 in the prior-year quarter, due to lesser revenue
realizations due to lower iron ore grades as well as customer
Cash cost per ton in the Asia-Pacific Iron Ore segment climbed 2%
to $75.10 on the back of higher mining and logistic costs.
North American Coal:
Sales volumes spiked 27% to 1.8 million tons, led by
significantly higher sales volume from Cliffs' Oak Grove Mine.
Revenues per ton decreased 9% to $110.35, due to lower spot
pricing for metallurgical coal products. Cash cost per ton
decreased 6% to $91.16, due to lower maintenance and
Cliffs had $287.2 million in cash and cash equivalents as of
Mar 31, 2013, compared with $122.3 million as of Mar 31, 2012.
Long-term debt stood at $3,433 million as of Mar 31, 2013,
compared with $3,583.8 million as of Mar 31, 2012.
The company reaffirmed its 2013 capital expenditures budget of
$800-$850 million. Cliffs also maintains its 2013 selling,
general and administrative expenses outlook of roughly $230
million. Cliffs expects depreciation, depletion and amortization
to be around $565 million in 2013.
U.S. Iron Ore Outlook
Cliffs reiterated its production volume guidance in U.S. Iron
Ore to be 20 million tons in 2013 while it increased its sales
expectations to 21 million tons from its earlier guidance of 20
million tons. Cash cost guidance was maintained in the range of
$65-$70 per ton.
Eastern Canadian Iron Ore Outlook
The company maintained its sales volume target in the range of
roughly 9-10 million tons and production is also expected to be
in the range of 9-10 million tons. Cash cost per ton in Eastern
Canadian Iron Ore is expected to be in the range of $95-$100 in
Asia Pacific Iron Ore Outlook
For 2013, sales and production volumes are forecast to be 11
million tons. Cash cost per ton is expected to be roughly
North American Coal Outlook
For 2013, the company expects sales and production volumes for
North American Coal to be around 7 million tons. Cash cost per
ton has been projected in the range of $95-$100.
Cliffs remains optimistic regarding its financial flexibility
including its prospects for cash generation and opportunities to
fund organic growth projects and return cash to shareholders. It
also has a significant presence in the Asia-Pacific region, where
demand is still robust, lending support to shipments. However,
Cliffs remains hamstrung by lower iron ore pricing, partly due to
oversupply in the industry.
Cliffs currently retains a Zacks Rank #3 (Hold).
Another mining company
Freeport-McMoRan Copper & Gold Inc.
) also recently released its first quarter 2013 results. The
company's adjusted earnings (excluding one-time charges) of 73
cents per share for the quarter beat the Zacks Consensus Estimate
by a penny but exceeded the year-ago earnings of 96 cents.
Among other mining companies,
Newmont Mining Corporation
) are slated to release their first-quarter 2013 results on Apr
29 and May 2, respectively.
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