UPDATE 2-Cliffs Natural profit falls with iron ore prices, tops view

Thu Jul 25, 2013 6:37pm EDT
 
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July 25 (Reuters) - Miner Cliffs Natural Resources Inc reported a lower second-quarter profit on Thursday due to declines in global iron ore prices, but earnings topped analysts' expectations and shares rose in after-market trading.

Cliffs, an iron ore and metallurgical coal producer, reported weaker operating results that were partly offset by income tax expenses of $9 million versus $42 million a year earlier.

Revenue per ton fell across Cliffs' business segments, and global seaborne iron ore prices dropped 11 percent.

Weakness in the steel market has hit relatively high-cost iron ore suppliers like Cliffs hard. Its stock is the worst performer on the S&P 500 this year to date, down more than 50 percent at Thursday's close.

The company bumped up its 2013 capital expenditure budget to $1 billion from between $800 million and $850 million. It said the increase was needed to address tailings and water management issues at its Bloom Lake Mine in Quebec.

Bloom Lake was part of the Cleveland-based miner's takeover of Consolidated Thompson Iron Mines Ltd.

Higher-than-expected costs at the mine have weighed on Cliffs' earnings. Cliffs delayed a planned expansion last fall, and in January it took a $1 billion goodwill write down related to the Consolidated Thompson deal.

On Thursday, Cliffs also cut its sales forecast for the Eastern Canadian Iron Ore segment, citing worse-than-expected recovery rates and throughput at Bloom Lake.   Continued...