For the period ended December 31, the Ohio-based producer recorded quarterly revenue of $US1.4 billion, an all-time high and a 74% increase on $821 million in the same quarter 2009.
Cliffs said the jump was driven by higher sales volume and pricing from a greater exposure level to seaborne markets, as well as higher global demand for steelmaking raw materials.
Consolidated operating income was up 155% to $397 million from $156 million, and net income spiked 255% year-on-year to $384 million from $108 million.
The news was just as good for Cliffs’ whole-year results; fiscal 2010 revenues doubled to a record $4.7 billion, net income increased to more than $1 billion from $205 million, and full-year operating income increased to $1.3 billion from $230 million in 2009.
"Our impressive year-over-year earnings momentum is directly attributable to the strategic efforts to increase our business' exposure to seaborne pricing over the past five years,” Cliffs chairman and president Joseph Carrabba said.
Sales volumes for the North American coal segment increased 24% to 927,000 tons from 748,000t sold in 2009's fourth quarter. The jump was mostly due to 615,000t of incremental sales volume from INR Energy’s operations, which Cliffs acquired mid-2010.
The year-on-year drop in sales volumes from the Pinnacle and Oak Grove mines was attributed to adverse geological conditions.
While Cliffs crews were ready to hit the ground running on a new longwall plow system and refurbished coal preparation plant at the Pinnacle mine in West Virginia last fall, management said the mine was producing at very low levels during the installation and start-up. The system is now in place and, at quarter-end, was running successfully.
Crews are also making progress in the installation of a new mine shaft at Oak Grove in Alabama.
Looking ahead, Cliffs is optimistic for its businesses and anticipates continued growth in global steel production in 2011 – particularly in China, India and Brazil.
It is maintaining its North American coal sales and production volumes expectations of about 6.5 million tons, made up of 1Mt thermal, 1.5Mt high-volatile metallurgical and 4Mt low-volatile met coal.
Revenue per ton for this year is expected to be $135-140, and anticipated cost per ton should be in the range of $105-110.
“Cliffs expects to generate more than $2.7 billion in cash from operations in 2011,” the company outlined in its report.
“The company expects capital expenditures of approximately $700 million, comprised of approximately $300 million in sustaining capital and approximately $400 million in growth and expansion.”
Included in its capex project portfolio for North American coal are $45 million for work to bring the Lower War Eagle complex, a high-volatile met coal mine in West Virginia, into production, and $16 million for Oak Grove’s mine shaft construction. Another $14 million will be used for the longwall installation at the Pinnacle mine.
