Cliffs stock rises on Q4 profit trumping analyst predictions
TORONTO (miningweekly.com) – The NYSE-listed stock of US iron-ore and coal producer Cliffs Natural Resources on Monday rose after the company beat earnings expectations despite shuttering its Eastern Canadian operations and grappling with sluggish demand and prices for both commodities.
Excluding one-off items, such as negative Eastern Canadian iron-ore operating margins and asset impairment charges of $1.2-billion, Cliffs reported net income of $166-million, or $1 a share, beating average Wall Street analyst expectations of earning $0.13 a share for the three months ended December.
Cliffs ended Monday up 8.57% at $6.97, but rose to $7.68 a share in after-market trading.
Analysts expected revenue of $1.21-billion for the period under review, falling short of the company’s actual reported consolidated revenues of $1.3-billion. Revenue for the three months was down 15% year-on-year, mainly driven by lower revenues from the Asia Pacific and Eastern Canadian iron-ore segments.
Cliffs realised revenues in these segments were narrowly tied to seaborne iron-ore prices, which were 45% lower compared with the fourth quarter of 2013, partially offset by higher US revenues.
The cost of goods sold decreased 9% to $1.1-billion, mainly driven by reduced sales volumes from Wabush and cost-cutting efforts achieved across all business units through reduced headcounts, improved labour productivity, decreased spending on contractors and favourable foreign exchange rates. This decrease was partially offset by increased sales volumes from US iron-ore.
For the fourth quarter of 2014, Cliffs recorded a net loss attributable to Cliffs' common shareholders of $1.3-billion, or $8.25 a share, compared with a profit of $30.5-million, or $0.20 a share, a year earlier.
Cliffs last week filed for creditor protection for its Canadian arm to try and isolate losses and protect shareholders.
The miner last Tuesday noted that it had started restructuring proceedings in Montreal to help insulate the publicly listed US parent company from the vast majority of the $650-million to $700-million in closure costs tied to its mothballed assets in Canada.
In November, Cliffs moved to cease production at its Bloom Lake iron-ore mine, in Quebec, after its attempts to sell a 30% stake in the mine failed.
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