Cliffs Natural Resources’ Q3 2016 Earnings Preview: Cost Reduction Initiatives To Drive Improvement In Earnings

-9.63%
Downside
22.13
Market
20.00
Trefis
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CLF
Cleveland-Cliffs

We expect Cliffs to report a significant improvement in its third quarter earnings results, driven by the success of the company’s cost reduction efforts. Lower maintenance and repair costs as a result of the company’s cost reduction initiatives, lower energy costs, the impact of workforce rationalization and the favorable impact of foreign exchange movements on the costs of the Asia Pacific iron ore operations (strengthening of the U.S. Dollar against the Australian Dollar), helped lower the company’s cash production costs in the first half of the year, as summarized in the table shown below. We expect the company to demonstrate similar cost performance in Q3 as well. Moreover, an improved iron ore pricing environment in Q3 this year will provide additional support to the company’s profits.

CLF Q3 2016 Pre-earnings 1

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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