Cliffs Natural Resources’ Q2 2016 Earnings Preview: Cost Reduction Initiatives To Boost Results

We expect Cliffs to report a year-over-year improvement in its Q2 earnings driven by the success of the company’s cost reduction efforts. Though benchmark iron ore prices stood slightly lower in Q2 this year as compared to the corresponding period last year, a decline in Cliffs’ production costs should offset the impact of lower prices on earnings. A reduction in maintenance and repair costs as a result of the company’s cost reduction initiatives, as well as the favorable impact of the strengthening of the U.S. Dollar on the costs of the Asia Pacific iron ore operations (which are denominated in Australian Dollars), helped lower the company’s cash production costs in Q1, as shown below. We expect a repetition of this favorable cost performance in Q2 to boost the company’s results.

Have more questions about Cliffs Natural Resources? See the links below.

• What Is Cliffs Natural Resources’ Fundamental Value Based On 2015 Results?
• What Is Cliffs Natural Resources’ Revenue And EBITDA Breakdown?
• How Has Cliffs Natural Resources’ Revenue Composition Changed Over The Last 5 Years?
• By What Percentage Did Cliffs Natural Resources’ Revenue & EBITDA Decline Over The Last 5 Years?
• By What Percentage Can Cliffs Natural Resources’ Revenue & EBITDA Change Over The Next 3 Years?
• How Will Cliffs Natural Resources’ Revenue Composition Change by 2020?
• How Do Cliffs Natural Resources’ Margins Compare With Those Of Iron Ore Mining Giants Such As Rio Tinto And Vale?
• Why ArcelorMittal Is The Most Important Customer For Cliffs’ U.S. Iron Ore Sales

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