Cliffs Natural Resources Inc., the largest U.S. iron-ore producer, fell the most in more than a year after reporting third-quarter results that missed analysts’ estimates as prices declined and costs rose.
Cliffs slumped 11 percent to $38.20 at the close in New York, the biggest drop since July 26.
Net income slid 86 percent to $85.1 million, or 59 cents a share, from $601.2 million, or $4.15, a year earlier, the Cleveland-based company said yesterday in a statement. Profit from continuing operations was 61 cents a share, missing the $1.02 average of 21 estimates compiled by Bloomberg. Sales fell 30 percent to $1.45 billion.
Cash costs in Cliffs’ Canadian division rose 21 percent to $106.06 a ton. Costs at the Bloom Lake Mine, which Cliffs acquired with its 2011 purchase of Consolidated Thompson Iron Ore Mines Ltd., increased 18 percent from a year earlier driven by higher fuel, labor, maintenance and supply expenses, the company said in the statement.
The price of seaborne iron ore fell 36 percent to an average of $112 a metric ton in the quarter, compared with $176 a year earlier, according to Steel Business Briefing data compiled by Bloomberg. Cliffs decreased its outlook for the spot price of iron ore this year by 12 percent to $128 a ton from a July forecast of $145 a ton.
The lower prices reflect “a significant mix shift to lower-grade ore in Asia Pacific and changes in customer mix in the U.S.,” Curt Woodworth, a New York-based analyst at Nomura Securities International Inc., wrote in a note today.
U.S. steelmakers used 75 percent of their capacity on average in the third quarter, compared with 76 percent a year earlier, according to data compiled by Bloomberg from the American Iron and Steel Institute. Capacity utilization has tumbled from 81 percent in April to 70 percent on Oct. 22.
Cliffs calculates cash costs based on the cost per ton of operating expenses and goods sold excluding depreciation, depletion and amortization.