North American iron ore and metallurgical coal miner Cliffs Natural Resources Inc. on Friday reported its fiscal results for the third quarter 2009 and for the first nine months of the year.
Consolidated revenues in the third quarter, ended September 30, 2009, were $666.4 million, down 44 percent from $1.2 billion in the same quarter last year. Cliffs attributed the decrease in revenues to lower volume in its North American businesses and lower year-over-year pricing for iron ore.
For the third quarter, Cliffs' reported operating income of $80.5 million, versus operating income of $339.4 million last year, attributing the year-over-year drop to lower due to reduced sales volumes and price realizations. The company also indicated that lower costs and spending helped the firm reduce its expenses during the quarter and achieve improved year-over-year cost efficiencies. Net income attributable to Cliffs` shareholders in third quarter 2009 was $58.8 million, compared with $174.9 million in the third quarter of last year.
While year-over-year sales and revenues comparables are down, Cliffs also commented that the company noted a marked improvement in business conditions and an improved outlook in the third quarter compared with the first half of 2009.
Joseph A. Carrabba, Cliffs` chairman, president and chief executive officer, said, "Throughout the third quarter, we saw steadily improving demand from our North American iron ore and metallurgical coal customers. We have begun to increase production at most of our facilities and will continue to monitor the markets closely to meet demand. Sales volume expectations are increasing in North American Iron Ore and North American Coal, and Asia Pacific Iron Ore remains positioned for a record year in terms of tons shipped. Finally, I am enthusiastic about our recently announced transaction to acquire our joint-venture partners` interests in Wabush Mines, which will provide us additional exposure to the seaborne iron ore market starting in 2010."
For the first nine months of 2009, revenues decreased 43 percent to $1.5 billion from $2.7 billion reported in the same period last year. Operating income for the nine-month period of 2009 was $74.6 million, compared with $791.6 million in the year-ago period. Net income attributable to Cliffs` shareholders year-to-date was $96.9 million, compared with $461.9 million in the same period last year.
In its outlook for iron ore, the company stated that as customer demand for iron ore pellets continues to increase, Cliffs is raising its expectations for 2009 sales volume to 17.4 million net tons. Cliffs also indicated it expects to collect cash for an additional two million tons of "bill and hold" sales in 2009 that are unlikely to meet revenue recognition requirements.
The company expects average revenue per ton in the North American Iron Ore business segment to be approximately $75 to $80 in 2009.
Cliffs said it expects to achieve iron ore sales volume of approximately 23 million tons in 2010. This includes 2.5 million tons of incremental sales from the recently Wabush Mines transaction assuming that transaction closes on or about Dec. 31, 2009.
Cliffs Natural Resources Inc. is the largest producer of iron ore pellets in North America, a major supplier of direct-shipping lump and fines iron ore out of Australia and a significant producer of metallurgical coal. Cliffs' North American business unit is comprised of six iron ore mines owned or managed in Michigan, Minnesota and Eastern Canada, and two coking coal mining complexes located in West Virginia and Alabama. Its Asia Pacific business unit is comprised of two iron ore mining complexes in Western Australia and a 45 percent economic interest in a coking and thermal coal mine in Queensland, Australia. The South American business unit includes a 30 percent interest in the Amapá Project, an iron ore project in the state of Amapá in Brazil.