Cleveland-Cliffs Inc.’s third quarter revenue is down compared to third quarter 2021 revenue. The Cleveland-based rolled steel maker reports consolidated revenue of $6.5 billion in the third quarter to $5.7 billion. $1 billion in the third quarter of 2021.
For the third quarter of this year, Cleveland-Cliffs reported net income of $1.3 billion ($2.33 per diluted share) for the third quarter of 2021, compared with $165 million ($2.33 per diluted share). 29 cents per share).
In the first nine months of the year, Cleveland Cliffs achieved revenues of $17.9 billion, net income of $1.6 billion, and $2.95 per diluted share as of September 30. For the first nine months of 2021, the company reported his $15.1 billion. Revenue and net income of $2.1 billion, or $3.69 per diluted share.
Cleveland-Cliffs posted third-quarter 2021 adjusted EBITDA of $1.9 billion compared to third-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $452 million said it was. Adjusted EBITDA of $3.0 billion compared to $3.8 billion in the same timeframe in 2021.
Lourenco Goncalves, Chairman, President and CEO of Cleveland-Cliffs said: “Now that all major projects have been completed and production levels have returned to normal, he expects costs to drop significantly in the fourth quarter and into 2023.”
Goncalves added that shipments to the company’s automotive customers improved in the third quarter of this year, “reaching the highest level in six quarters.”
he said: This positive trend in vehicle shipments is expected to continue into the fourth quarter, with the added benefit of improved pricing from successful contract renewals related to the October cycle. Spot supply should tighten as the auto industry ramps up production. That will support future pricing. ”
According to Cleveland-Cliffs’ earnings report, steel product sales totaled 3.6 million tonnes net in the third quarter, of which 33% was coated steel, 29% hot-rolled steel, 15% cold-rolled steel, 6 % plate, 5% electrical, including stainless steel and slabs and rails, and 12% other. Steel revenues of $5.5 billion included $1.7 billion (31%) of direct sales to the automotive market. $1.5 billion or 27% of sales to the distributor and converter market. $1.5 billion or 27% of sales to infrastructure and manufacturing markets. $847 million, or 15% of sales to steelmakers.
The company said its steelmaking unit costs increased in the third quarter compared to the second quarter of this year. This is due to the lagged impact of increased cost inventory produced in the prior period, which was impacted by higher repair and maintenance costs and lower production volumes. Natural gas, electricity, scrap, alloys.
Mr Goncalves said Cleveland-Cliffs’ most significant event in the third quarter was the ratification of a labor agreement with the company’s United Steelworkers- (USW-) representative employees.
In connection with its newly ratified labor agreement with United Steelworkers, Cleveland-Cliffs has remeasured the assets and liabilities of its related pension/other post-employment benefit (OPEB) plans. Cleveland-Cliffs said its pro forma pension/OPEB liabilities (net of assets) decreased by $1.8 billion, or 63%, since its last remeasurement on December 31, 2021. apart from a labor contract. Due to the timing of ratifications, the full impact of the agreement is not reflected in these earnings. Going forward, Cleveland-Cliffs said it expects cash flow requirements associated with the OPEB plan to be reduced by more than $100 million annually, or about 50%.
Goncalves added that the company used its size to negotiate better health care rates for retirees.
“It is well known that the primary source of enterprise value that we leveraged to acquire US assets from ArcelorMittal in December 2020 is the annuity and assumption of OPEB debt upon acquisition,” said Goncalves. . “Fast forward, the total post-acquisition debt balance of $4.2 billion is now irrelevant as only $1.1 billion remains on the books. We have also renegotiated the reductions, which have not yet been remeasured.The remeasurement of these non-USW plans will take place at the end of the year and total pension and OPEB liabilities are currently shown pro forma. We expect it to be even lower than that.”
Outlook for the fourth quarter
Based on this year’s current futures curve, which means the average price of the Hot Rolled Coil Steel Index is $730 per net tonne for the remainder of the year, Cleveland-Cliffs expects an average sales price for the full year of about $1,370. says he expects it to be per net ton. Operating costs for the steelmaking unit are expected to decrease by at least $80 per net ton in the fourth quarter due to lower repair and maintenance costs, higher output and lower energy and raw material costs.
Celso Goncalves, executive vice president and chief financial officer of Cleveland-Cliffs, said in the company’s third quarter earnings call: Please call us on October 25th. Also, his EBITDA for third-party pellet and scrap businesses decreased as a result of lower prices. Looking to the fourth quarter, the improvement achieved in contractual fixed prices reset in October will help mitigate the lagging impact of the continued decline in index prices, while the Slab and HRC A heavier product mix is a negative factor in the realization price. ”
