Cliffs Natural Resources Q1 2016 Earnings Review: Decline In Realized Prices And Higher Idling Costs Negatively Impact Results

-12.05%
Downside
22.74
Market
20.00
Trefis
CLF: Cleveland-Cliffs logo
CLF
Cleveland-Cliffs

Cliffs reported a 35% decline in its Q1 2016 earnings per share driven by a decline in realized iron ore prices and higher U.S. cash operating costs, resulting from costs pertaining to the idling of excess production capacity. Weakness in domestic steel production as a result of competition from cheap steel imports has translated into weak demand for iron ore, which is one of the main raw materials in steel production. This is reflected in the decline in U.S. Iron Ore shipments (as a result of idling of excess capacity in response to weak demand) as well as lower overall revenue, since Cliffs’ U.S. operations account for over 70% of the company’s overall revenue and have a major impact on overall results.

CLF Earnings 1

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Cliffs Natural Resources

 

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