Cliffs Natural Resources’ Q2 2016 Earnings Review: Success Of Cost Reduction Initiatives And Recovery In Iron Ore Demand Bode Well For The Rest Of The Year

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Cleveland-Cliffs

Cliffs recorded a significant year-over-year improvement in its second quarter results, which primarily indicates the success of the company’s cost reduction initiatives, as reflected in its cash production costs. Cliffs undertook concerted efforts to lower its production costs last year in order to combat a subdued iron ore pricing environment. A rationalization of repair and maintenance, energy, and labor costs helped the company’s U.S. Iron Ore operations rein in its production costs whereas operational improvements and the rationalization of labor and administrative costs helped lower production costs at the Asia Pacific Iron Ore operations. Given the improvement in the prospects of the domestic steel industry, partly as a result of regulatory intervention that resulted in the dissipation of competition from cheap steel imports, Cliffs’ U.S. iron ore shipments are set to rise in 2016. An improved demand environment combined with lower-cost operations bodes well for the company for the rest of the year.

CLF Q2 2016 Earnings Review

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

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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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