Cliffs Natural Resources Inc. (CLF:US), the largest U.S. iron-ore producer, reported third-quarter results that missed analysts’ estimates as the price of the steelmaking raw-material dropped.
Net income (CLF:US) fell 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 today in a statement. Profit from continuing operations was 61 cents a share, missing the $1.02 average of 21 estimates (CLF:US) compiled by Bloomberg. Sales dropped 30 percent to $1.45 billion.
The price of seaborne iron ore fell 36 percent to an average $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 (CLF:US) for the spot price of iron ore this year by 12 percent to $128 a ton from a July forecast of $145 a ton.
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., rose 18 percent from a year earlier driven by higher fuel, labor, maintenance and supply costs, the company said in the statement.
“That was a shocker on Canada,” Laurence Balter, who oversees $100 million at Oracle Investment Research in Fox Island, Washington, said today in a phone interview. “The increase in cash cost was a little concerning for me.”
Cliffs fell 6.9 percent to $39.76 at 6:29 p.m. after the close of regular trading in New York. The shares (CLF:US) declined 32 this year through the close.
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.
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