Cleveland-Cliffs reports record third quarter; stocks skyrocket

Cleveland-Cliffs reported a record third-quarter on Friday and stocks skyrocketed. NICK GRAHAM/STAFF
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Cleveland-Cliffs reported a record third-quarter on Friday and stocks skyrocketed. NICK GRAHAM/STAFF

Company outperforms Wall Street estimates; stocks jump 12.74%

Cleveland-Cliffs rewarded its investors Friday when stocks skyrocketed after record third-quarter earnings were released by the largest flat-rolled steel producer in North America.

Cleveland-Cliffs, which purchased AK Steel in Middletown for $1.1 billion in 2020, reported revenue surged 265% to $6 billion; net income jumped to $1.3 billion from $2 million in the same quarter in 2020; and earnings per share shot up to $2.33 from a loss of $0.02 last year.

By Friday afternoon, stocks were at $23.85, or an increase of 12.74%

For the first nine months of 2021, Cliffs recorded revenues of $15.1 billion and net income of $2.1 billion. In comparison, in the first nine months of 2020, the company recorded revenues of $3.1 billion and a net loss of $155 million, it released Friday.

Wall Street estimates called for revenue worth around $5.6 billion and earnings of $2.26 per share.

Lourenco Goncalves, Cliffs’ chairman, president, and CEO, said during a conference call that the company’s business model is based on a significant amount of contract sales.

“Differently from other steel companies more exposed to spot prices, we believe that our average sales price next year should be higher than in 2021, allowing us to continue to grow our already strong profitability and to further strengthen our balance sheet,” he said.

Cliffs this month agreed to acquire Ferrous Processing and Trading Company, the leading prime scrap processor in the U.S., Goncalves said.

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He said the integration of FPT into the company’s footprint as a premier flat-rolled steel producer should allow it to utilize more prime scrap, further reducing its utilization of coke and carbon emissions.

The company plans to close this acquisition in the fourth quarter, he said.

“This is real growth; profitable growth; environmentally friendly growth,” he said.

Also in 2020, Cleveland-Cliffs Inc. bought the U.S. assets of ArcelorMittal for $1.4 billion, making it the largest flat-rolled steel producer in North America, officials said.

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