Cliffs Earnings Beat Estimates After Idling OutputSonja Elmquist
Cliffs Natural Resources Inc., the largest U.S. iron-ore producer, rose the most in four years after first-quarter earnings topped analysts’ estimates as it idled some mines to reduce operating costs.
Cliffs climbed 15 percent to $20.95 at the close in New York, the biggest gain since March 23, 2009. The jump made Cliffs the day’s best performer on the Standard & Poor’s 500 Index after Akamai Technologies Inc.
Net income fell to $107 million, or 66 cents a share, from $375.8 million, or $2.63, a year earlier, the Cleveland-based company said in a statement after the close of regular trading on U.S. markets yesterday. Excluding a 6-cent tax benefit, per-share profit exceeded the 33-cent average of 18 estimates compiled by Bloomberg. Sales fell 5.9 percent to $1.14 billion.
In the past six months Cliffs has idled some production at mines in Michigan and Minnesota, cut its dividend by 76 percent and sold equity and depositary shares to raise $995 million after the price of iron ore slumped. The company also announced in November it would postpone the expansion of its Bloom Lake mine in Canada.
“When the wind changed, these guys adjusted the sails,” Laurence Balter, an analyst at Oracle Investment Research in Fox Island, Washington, said in a phone interview yesterday. “The cost decreased and average iron-ore prices increased. That’s exactly what you want.”
Cliffs’ cost of goods sold and operating expenses in its U.S. iron-ore division fell 8 percent to $252.8 million while its cash cost per ton at U.S. mines dropped by 1.6 percent. Per-ton cost at its Eastern Canadian division dropped 4.4 percent to $99.41 a ton, the company said in the statement.
The company raised its U.S. iron-ore sales outlook to 21 million tons from a previous estimate of 20 million tons as it sees blast furnace steel output in the U.S. and Canada of 40 million to 45 million tons at $630 a ton, down from an earlier estimate of $650.
Cliffs’ first-quarter coal sales volume rose 27 percent to 1.79 million tons after the Oak Grove mine recovered from 2011 storm damage.