Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) today reported fourth-quarter and full-year results for the period ended Dec. 31, 2012.
According to a company press release, full-year revenues of $5.9 billion decreased $691 million , or 11%, from the previous year. The lower revenues were driven by a 23% decrease in year-over-year seaborne iron ore pricing. For the full year, Cliffs recorded a net loss attributable to Cliffs’ common shareholders of $899 million , or $6.32 per diluted share, compared with net income of $1.6 billion , or $11.48 per diluted share, in 2011. Excluding the several previously disclosed non-cash impairment charges, which are detailed in the attached “Non-GAAP Reconciliation,” full-year 2012 adjusted net income attributed to Cliffs’ shareholders was $493 million , or $3.45 per diluted share, down from adjusted net income of $1.6 billion , or $11.68 per diluted share, in 2011. Also, Cliffs’ Board of Directors approved a meaningful reduction to Cliffs’ quarterly cash dividend rate to $0.15 from $0.625 per common share.
Joseph Carrabba , Cliffs’ chairman, president and chief executive officer, said, “While 2012 had some noteworthy highlights, including the operational turnaround of North American Coal and record sales volumes in Australia , the year proved to be challenging both from a market perspective and operationally. Unfortunately, our ramp up of Bloom Lake Mine has been slower than originally anticipated, resulting in decreased volumes and increased costs. Despite these challenges, we continue to make progress on the mine’s production stability, development, and tailings management. We believe this will ensure a smooth transition for Bloom Lake’s Phase II production startup next year. Bloom Lake is on track to achieve an annual production run rate of 14 million tons by 2015, which accounts for more than a quarter of Cliffs’ current total iron ore volume.”
For 2013, the Company’s expected sales and production volumes in U.S. Iron Ore are 20 million tons. The U.S. Iron Ore revenues-per-ton sensitivity included within the 2013 revenue sensitivity summary table above also includes the following assumptions:
- 2013 North American blast furnace utilization of approximately 70%
- 2013 average hot rolled steel pricing of $650 per ton
- Approximately 50% of the expected 2013 sales volume is linked to seaborne iron ore pricing
In addition, the revenues-per-ton sensitivity also considers various contract provisions, lag-year adjustments and pricing caps and floors contained in certain supply agreements. Actual realized revenue per ton for the full year will depend on iron ore price changes, customer mix, production input costs and/or steel prices (all factors contained in certain of Cliffs’ supply agreements).
Cliffs’ full-year 2013 U.S. Iron Ore cash-cost-per-ton expectation is $65 – $70 . Cash costs per ton are anticipated to be slightly higher year over year primarily due to less fixed-cost leverage as the result of lower expected full-year sales volume. Depreciation, depletion and amortization for full-year 2013 is expected to be approximately $6 per ton.