Cliffs Natural Resources hit with 40% sales margin drop in Q3
Cliffs Natural Resources (NYSE:CLF), the world's largest producer of iron ore pellets has revealed Q2 2013 results showing a 40% loss in sales margin from $443 million in the same period last year to $268 million this quarter.
Weak iron ore pricing – which fell 11% – and higher production costs were the main drivers behind the drop, the company said. Also included in this sum is a $68 million write-down of Cliffs' Amapa investment.
Meanwhile the miner's sales volume of iron ore pellets in the US was up 300,000 tonnes.
Consolidated revenues totaled $1.5 billion – down 6% compared to last year.
Cliffs also highlighted cost-saving successes, noting a 44% year-over-year SG&A and exploration expense decrease.
Looking forward the company forecasts stable demand from China and the US – its two largest customers.
"In China, year-to-date average crude steel production is trending higher over the previous year, contributing to increased seaborne iron ore imports," the miner said in a statement.
Despite higher costs and price volatility Cliffs is maintaining most production and sales forecasts with the exception of Canadian operations at Bloom Lake mine where it is reducing sales volume from about 9-10 million tonnes to 8-9 million tonnes.
The company also announced that by the end of this year Joseph Carrabba, CEO and president of Cliffs, will retire.
Shares rose after hours by 4% to $19.12.