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Cliffs Natural Resources Reports Second Quarter 2011 Results
07/28/2011 - Cliffs Natural Resources reported net income attributable to Cliffs' common shareholders of $408 million on record consolidated revenues of $1.8 billion for the second quarter ended June 30, 2011.
Cliffs Natural Resources Inc. reported net income attributable to Cliffs' common shareholders of $408 million on record consolidated revenues of $1.8 billion for the second quarter ended June 30, 2011.
Operating income was $617 million, an increase of 69% from the year-ago second quarter. Net income attributable to Cliffs' common shareholders, $408 million ($2.92 per diluted share) compares to net income of $261 million ($1.92 per diluted share) in the year-ago second quarter. Record consolidated revenues of $1.8 billion reflect a 52% increase from $1.2 billion in the same quarter last year.
The company said year-over-year improvements were driven by higher pricing in the company's iron ore business segments, along with incremental sales from Cliffs' recently acquired Bloom Lake operations in Eastern Canada.
Management Comments — Joseph A. Carrabba, Cliffs' Chairman, President and CEO, said, "During the quarter, we successfully completed the acquisition of Consolidated Thompson and are on track to quickly integrate the operations. Recently, we announced a third-phase expansion at Bloom Lake, which is expected to increase annual production capacity to 24 million tons by 2015 to 2016. In addition, Bloom Lake's annualized ramp up to 8 million tons and 16 million tons is on track to be completed by 2011 and 2013, respectively. Although we have operated Bloom Lake Mine for less than a quarter, its performance has been strong and we look forward to expanding our production profile in Eastern Canada."
As a result of its recent acquisition of Consolidated Thompson, Cliffs has reorganized its reportable business segments into: U.S. Iron Ore, Eastern Canadian Iron Ore, Asia Pacific Iron Ore and North American Coal. Cliffs' U.S. Iron Ore segment now includes tons sold from the company's iron ore operations in the United States: Empire Mine, Tilden Mine, Northshore Mining, United Taconite and Hibbing Taconite. Cliffs' Eastern Canadian Iron Ore segment now includes tons sold from the company's iron ore mines in Canada: Wabush Mines and the Bloom Lake Mine.
Capital Structure, Cash Flow and Liquidity — At quarter end, Cliffs had $238 million of cash and cash equivalents, $3.9 billion in long-term debt and no borrowings drawn on its $600 million revolving credit facility.
For the quarter, Cliffs reported depreciation, depletion and amortization of $105 million and generated $618 million in cash from operations.
Outlook — As a result of the current economic environment, including continued growth in Chinese steel production and steady blast furnace utilization rates in Europe and North America, Cliffs expects demand for its products to remain steady through the remainder of 2011. With a growing production profile, Cliffs believes it is well positioned to generate significant cash flows through 2011 and beyond.
2011 Capital Budget Update and Other Uses of Cash — For 2011, based on the above outlook, Cliffs would generate an anticipated $2.6 billion in cash from operations.
The company noted it is maintaining its 2011 capital expenditures budget of approximately $1 billion, comprising approximately $300 million in sustaining capital and $700 million in growth and expansion capital.
Cliffs Natural Resources is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. Cliffs' strategy is to continually achieve greater scale and diversification in the mining industry through a focus on serving the world's largest and fastest growing steel markets.
The company is organized through a global commercial group responsible for sales and delivery of Cliffs products and a global operations group responsible for the production of the minerals the company markets. Cliffs operates iron ore and coal mines in North America and two iron ore mining complexes in Western Australia. The company also has a 45% economic interest in a coking and thermal coal mine in Queensland, Australia. In addition, Cliffs has a major chromite project, in the pre-feasibility stage of development, located in Ontario, Canada.
