Cliffs Natural Resources Inc (NYSE:CLF) Q2 results
Cliffs Natural Resources Inc (NYSE:CLF) announced its Q2 results for the quarter that ended 30 June 2013. Consolidated revenues of $1.5 billion dropped $91 million, or 6% from 2012. The drop in revenues was driven by an 11% decline in its global seaborne-iron ore pricing to an average of $126/ ton for a 62 percent Fe fines product. The cost of goods that were sold rose by 7% to $1.2 billion.
This was largely driven by a rise in sales volumes in US Iron Ore and North American Coal and, higher idle costs and unfavorable inventory adjustments. Lower sales volumes in Eastern Canadian Iron-Ore partially offset this. There was a 40% drop in the consolidated sales margin in the Q2 to $268M from $443M in comparison to the same quarter in 2012.
CLF reported Q2 revenues of $1.5B and net income of $133M or $0.82 /diluted share. There was a 44% decrease in YoY SG&A as well as exploration expenses, to USD 62 million. The entire year exploration expense outlook and SG&A dipped by $25M to $290M.The company generated $414M in cash from its operations in the Q2. The results are inclusive of a $68M impairment charge that is related to the Cliffs’ Amapa Investment write-down.
There was a 28% drop in the 2013 Q2 operating income, to $262M. This drop has been attributed to a lower consolidated-sales margin and has been offset to a certain degree by the notable drop in YoY SG&A as well as exploration expenses.
The drop in SG&A and the exploration expenses has been attributed to a broader focus on cost-management and reduced spending on professional and drilling services for some projects. This lower operating-income also was offset to a certain degree by a rise in miscellaneous net. This was largely made up of the $39M benefit that was related to foreign currency-exchange re-measurements. In addition to this, the $19M non-cash gain was related to the final-transfer of the company’s Cockatoo Island operation as well as the purchaser’s assumption of some asset-retirement obligation liabilities.