Cliffs Natural Resources Inc.’s CLF net loss (attributable to common shareholders) for fourth-quarter 2015 was 39 cents per share, narrower than net loss of $7.19 per share recorded in the year-ago quarter.
Barring one-time items, loss for the quarter was 14 cents per share, lower than the Zacks Consensus Estimate of a loss of 32 cents.
For 2015, net loss (attributable to common shareholders) was $5.13 per share, narrower than net loss of $40.36 per share recorded in 2014.
Sales for the quarter came in at $476 million, down 53.8% from $1030.3 million in the prior-year quarter. Sales missed the Zacks Consensus Estimate of $508 million.
For the full year, sales were down 40.3% year over year to $2,013.3 million.
Segment Performance
U.S. Iron Ore: U.S. Iron Ore pellet sales volume was 4.5 million tons in the fourth quarter, compared with 7.8 million tons in the year-ago quarter. The decline was mainly due to termination of a customer contract, weaker demand from U.S. mills and higher sales in the year-ago quarter from the delayed start-up of the 2014 shipping season.
Revenues per ton were down 25% year over year to $74.23. Cash production cost per ton decreased 23.1% year over year to $45.36 in the reported quarter due to reduced employment costs, lower maintenance and repair costs, and decreased energy rates.
Asia Pacific Iron Ore: Sales volumes in the segment were almost on par with the year ago quarter and stood at 2.9 million tons.
Revenues per ton were $33.73, down around 38.6% from $54.96 in the prior-year quarter. Cash production cost per ton was $25.76, down 40% from the year-ago quarter. The decrease was due to lower mining and haulage costs, lower headcount, and favorable foreign exchange variances.
Financial Position
Cliffs had $285.2 million of cash and cash equivalents as of Dec 31, 2015, compared with $271.3 million as of Dec 31, 2014. Long-term debt was at $2,699.4 million as of Dec 31, 2015, compared with $2,826.5 million as of Dec 31, 2014.
Capital expenditure was $26 million for the fourth quarter, representing a reduction of 49% year over year. Depreciation, depletion and amortization was $35 million in the quarter.
Labor Update
Cliffs is actively negotiating with the United Steelworkers and remains committed to reach a fair and equitable agreement. The existing contract has been extended by mutual agreement of both parties.
Outlook
For 2016, Cliffs expects selling, general and administrative (SG&A) expenses to be about $95 million, down $15 million from the 2015 level.
The company expects interest expense for 2016 to be about $240 million, of which roughly $205 million is cash interest.
Cliffs expects 2016 capital expenditures to be $50 million, a considerable reduction from 2015 level of $83 million. The expected reduction is driven by the sale of the remaining coal assets as well as spending discipline in the company’s U.S. Iron Ore business.
U.S. Iron Ore Outlook
For 2016, Cliffs expects sales volume of about 17.5 million tons from its U.S. Iron Ore business. The company plans to produce about 16 million tons of iron ore pellets to cut pellet inventory levels and generate cash flow from working capital.
Asia Pacific Iron Ore Outlook
For 2016, Cliffs expects sales and production volume of roughly 11.5 million tons for the Asia Pacific Iron Ore operation.
Cliffs currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the mining space include AngloGold Ashanti Ltd. AU, Golden Star Resources, Ltd. GSS and Agnico Eagle Mines Limited AEM. All of them carry a Zacks Rank #2 (Buy).
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