Cliffs Natural Resources Inc. today reported third-quarter results for the period ended September 30, 2013. In a press release from the company, it was declared that, year-over-year consolidated revenues of $1.5 billion increased slightly driven by a 17% increase in global seaborne iron ore pricing to an average of $133 per ton for a 62% Fe fines product (C.F.R. China). The company says this was partially offset by lower market pricing for metallurgical coal products and a 2% decrease in global iron ore sales volumes. Cost of goods sold decreased by 11% to $1.2 billion, primarily driven by lower cost rates across all of the Company’s business segments. Lower cost of goods sold and higher revenues resulted in a 76% increase in consolidated sales margin to $349 million, from $198 million in last year’s comparable quarter.
James Kirsch, Cliffs’ Chairman of the Board, said, “We are pleased with the third quarter’s operating performance and financial results. During the quarter, we cut costs across the board, improved year-over-year sales margin, and lowered our full-year capital expenditures outlook. We have made good progress and have even greater investment and operational opportunities in our future. Ultimately, we will be driven by strategies that create the best options to deliver value to shareholders.”
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Other information about the period from July 1 – September 30, 2013:
…Operating income for the third quarter of 2013 increased 194% to $224 million. The increase was primarily driven by the higher consolidated sales margin and significantly lower exploration expenses. The Company has taken measures to reduce exploration spending on drilling and other professional services for certain projects, as well as to scale back on chromite-related spending.
…Cliffs reported third-quarter 2013 net income attributable to Cliffs’ common shareholders of $104 million, or $0.66 per diluted share, compared with $85 million, or $0.59 per diluted share, in the third quarter of 2012.
U.S. Iron Ore pellet sales volume was 6.3 million tons, compared with 6.6 million tons in the third quarter of 2012. The decrease was primarily driven by reduced tonnage resulting from a customer’s force majeure and the expiration of a customer contract. This was partially offset by increased export sales, including pellet contracts that were previously supplied by Cliffs’ Wabush Mine, and increased demand from domestic spot sales.
…Third-quarter 2013 revenues per ton were $112.67, up 2% from $110.51 in the year-ago quarter. The increase was primarily attributable to an increase in pricing for one customer due to the reset of their contract base rate, higher year-over-year market pricing for iron ore, and a favorable true-up on the estimated hot-rolled steel pricing. As previously disclosed, certain customer contracts contain pricing mechanisms linked to hot-rolled steel. These increases were partially offset by credits to certain customers, unfavorable customer mix and increased sales to seaborne customers.
…Cash cost per ton in U.S. Iron Ore was $64.81, down 4% from $67.81 in the prior year’s third quarter. The decrease was primarily driven by the absence of a LIFO inventory adjustment that unfavorably impacted the prior year’s third-quarter results. Lower labor and repair and maintenance costs also contributed to the improved year-over-year cash cost.