Cliffs Natural Resources (CLF $19.56 +1.63) reported first quarter earnings of $0.60 per share, $0.25 better than the Capital IQ consensus of $0.35, while revenues fell 5.9% year/year to $1.14 billion versus the $1.19 billion consensus.
First-quarter 2013 U.S. Iron Ore pellet sales volume was 3.1 million tons, compared with 3.4 million tons in Q1 of 2012. The decrease was primarily driven by lower YoY volume to one customer due to its bankruptcy in May of 2012.
Cliffs also indicated Q1 U.S. Iron Ore sales volume is historically lower compared with other periods due to seasonal shipping constraints on the Great Lakes. U.S. Iron Ore 2013 Q1 revenues per ton were $119.82, up 2% from $117.40 in the year-ago quarter. The increase was primarily attributable to customer mix and favorable provisional pricing settlements when compared to Q1 of 2012. Cash cost per ton in U.S. Iron Ore was $60.17, down 2% from $61.14 in the prior year’s first quarter. The decrease was primarily attributed to lower maintenance expenses. “Looking ahead, Cliffs anticipates the end markets for its products to remain healthy.
In Q1 of 2013, China’s annualized crude steel production achieved record levels, while utilization rates in North American remained stable. The Co expects pricing for the commodities it sells to remain volatile, with the potential to significantly decrease or increase at any point in time. Due to this expected volatility and for the purpose of providing a full-year outlook, Cliffs will utilize the year-to-date average Platts 62% Fe seaborne iron ore spot price as of March 31, 2013 of $148 per ton (C.F.R. China), as a base price assumption for providing its full-year revenue-per-ton sensitivities for the Co’s iron ore business segments.” “Cliffs indicated this assumption does not reflect the Co’s internal expectation of full-year seaborne iron ore pricing. As such, with $148 per ton as a base-price assumption for the full year, included in the table below is the expected full-year revenue-per-ton range for the Co’s iron ore business segments and the per-ton sensitivity for each $10-per-ton variance from the base-price assumption. The full-year sensitivity per ton for each respective iron ore business segment below reflects the sales volume and realized price achieved for first-quarter 2013 results and Cliffs’ realized expectation for the remaining periods in 2013.”