July 28, 2011 / 2:18 PM / in 6 years

Cliffs' shares fall after miner's profit misses

NEW YORK, July 28 (Reuters) - Cliffs Natural Resources (CLF.N) shares fell on Thursday, the day after the coal and iron ore miner’s second-quarter results missed Wall Street expectations because of higher costs and a major acquisition expense.

In morning trading on the New York Stock Exchange, the shares were down 4.7 percent at $89.17.

On Wednesday afternoon, Cliffs reported a 56 percent increase in second-quarter profit, but that fell short of expectations as its costs of goods sold and operating expenses ballooned by 40 percent over a year earlier.

Other operating costs more than doubled to $114 million -- including $18 million from the acquisition of Canada’s Consolidated Thompson, which closed in May.

Analyst Mark Levin of BB&T Capital Markets said Cliffs’ adjusted earnings of $3.01 per share were far short of his estimate of $3.55.

“The miss, relative to our estimate, was due to higher than expected costs,” largely a $48 million expense from the Bloom Lake iron ore mine in eastern Canada that was acquired in the Thompson deal, Levin said.

Levin also noted that Cliffs lowered its full-year North American coal shipment and revenue targets.

Anthony Young of Dahlman Rose & Co also cited higher-than-anticipated costs in the North American iron ore division.

“(But) we continue to believe in the long-term earnings power of the company,” Young said. “While the shares will likely be off sharply due to results broadly missing consensus estimates, we continue to believe that the company is well positioned for the medium- to long-term.” (Reporting by Steve James; Editing by Lisa Von Ahn)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below