Cleveland Cliffs Inc. (CLF) – Get Report shares fell lower Thursday after the steelmaker posted softer-than-expected gains in the second quarter, even as shipment volumes and cost inputs continue to improve.
Cleveland-Cliffs said adjusted earnings for the three months ended June were set at $1.46 per share, a figure well above last year’s total of 28 cents but lagging behind Street’s consensus forecast of $1. .52 per share. The group’s revenues, Cleveland-Cliffs said, have nearly quadrupled from last year to $5.05 billion, essentially matching analysts’ estimates of $5.01 billion.
Looking at the current quarter, Cleveland-Cliffs said it sees adjusted earnings of about $1.8 billion, compared to a consensus of about $1.9 billion, and free cash flow generation of about $1.4 billion, of which CEO Lourenco Goncalves said it will set up a “monumental debt”. reduction in the second half of this year.”
“The numbers unequivocally confirm our efficiency in exploiting the new footprint, which is the result of the integration of the two major steel companies acquired in 2020 as one and indivisible mining and steel company,” said Goncalves. “They also demonstrate our impeccable execution in ramping up our state-of-the-art Direct Reduction plant in Toledo to current production levels above rated capacity.”
“This quarter was also a clear illustration of our raw material costs and quality advantage over others in the industry, particularly those who rely entirely on scarce prime grade scrap and dirty pig iron imported from polluting countries,” he added.
Shares of Cleveland-Cliffs were 6.6% lower in early trading on Thursday to switch hands at $19.80 apiece, a move that would still leave the stock with a year-to-date gain of around 36%.
“Looking ahead, we remain optimistic about Cleveland-Cliffs as the company continues to optimize its large domestic steelmaking footprint and HBI assets and brings a new commercial discipline to the integrated model,” said Credit Suisse analyst Curt Woodworth, who is an outperformer. has a rating. with a price target of $28 on the stock
“It is important to note that Cleveland-Cliffs has significant upside potential in its contract portfolio going into 2022 with ~30% of annual contracts that will be repriced in 4Q-21, which settled lower in the prior year period,” he added. ready.