| Cliffs’ US Iron Ore Pricing Helped It Deliver an Earnings Beat | |
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Highlights of Cliffs’ 1Q15 Earnings: Beat on US Pricing (Part 2 of 5) (Continued from Part 1) Cliffs Natural Resources’ revenue
Cliffs Natural Resources’ (CLF) revenue for 1Q15 was $446 million—28% lower YoY (year-over-year). Cliffs excluded NAC (North American Coal) from the revenue contribution and classified it as a “discontinued operation.” This was done because NAC is treated as non-core and non-strategic. It’s up for sale.
Cliffs also reduced its SG&A (selling, general, and administrative) expenses by 22% from 1Q14. Expenses came in at $29 million for 1Q15.
US iron ore
USIO (US iron ore) pricing came in at $93 per ton. It was the main reason why Cliffs’ results beat the estimates. This is well above the company’s full-year guidance of $80–$85 per ton. This is what analysts expected for 1Q15 as well.
The realized pricing mainly benefited from higher priced carryover tons in 1Q15 from the previous quarter. The cost side was also a positive surprise. The cash costs for USIO decreased by 20% to $64.98 per ton. The decrease was mainly due to reduced energy and repair and maintenance expenditures. USIO’s volumes were 2.9 million tons—up 4% from 1Q14. This was due to more favorable shipping conditions in the Great Lakes in 1Q15—compared to 1Q14.
Asia Pacific iron ore
APIO’s (Asia Pacific iron ore) volume increased by 15% to 3 million tons in 1Q15. The increase was mainly due to a favorable shipping schedule during 1Q15. The favorable exchange rate also helped APIO’s cash costs. They declined by 28% YoY. The rest of the decline was due to reduced mining and administrative costs.
Other companies in the iron ore segment, BHP Billiton (BHP) and Vale SA (VALE), announced their 1Q15 production results on April 22. Rio Tinto (RIO) announced its production results on April 21. BHP slowed down its expansion to 290 million tons per annum. Vale also hinted at curtailing 30 million tons of iron ore capacity to improve its margins.
The SPDR S&P Metals and Mining ETF (XME) is another way for investors to get exposure to the metals and mining space without picking individual companies. Cliffs forms 4% of XME’s holdings.
Continue to Part 3 Browse this series on Market Realist:
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CLIFFS Natural Resources
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PRODUCER |
CODE : CLF |
ISIN : US18683K1016 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
CLIFFS Natural Res is a iron producing company based in United states of america. CLIFFS Natural Res produces iron, coal in Australia, in Brazil and in Canada, and holds various exploration projects in Canada. Its main assets in production are WABUSH MINE, EMPIRE AND TILDEN MINES, HIBBING TACONITE, NORTHSHORE MINE, UNITED TACONITE, OAK GROVE MINE, GREEN RIDGE MINE and PINNACLE MINE in Canada, AUSTRALIAN IRON ORE and SONOMA in Australia and AMAPA in Brazil and its main exploration properties are MT JACKSON J1 in Australia and DIAGNOS, WAWA, FREEWEST, MC FAULD'S LAKE, MACFADYEN, WAWA CLAIMS and BIG DADDY in Canada. CLIFFS Natural Res is listed in France, in Germany and in United States of America. Its market capitalisation is US$ 6.2 billions as of today (€ 5.8 billions). Its stock quote reached its highest recent level on May 16, 2008 at US$ 99.17, and its lowest recent point on January 15, 2016 at US$ 1.20. CLIFFS Natural Res has 297 400 968 shares outstanding. |