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.
It said it expects to sell between 8 million and 9 million tonnes in 2013, down from its previous forecast of 9 million to 10 million tonnes, and at slightly higher-than-expected cash costs.
Net income attributable to common shareholders dropped to $133.1 million, or 82 cents a share, from $258.0 million, or $1.81 a share, a year earlier. Revenue fell to $1.49 billion from $1.58 billion.
Analysts, on average, had expected 61 cents a share on revenue of $1.41 billion, according to Thomson Reuters I/B/E/S.
Cliffs shares rose 3.1 percent to $18.98 in after-market trading.