Why Cleveland-Cliffs Stock Is Sliding

Cleveland-Cliffs Inc CLF shares are trading lower Tuesday after the company reported weak fourth-quarter financial results.

What Happened: Cleveland-Cliffs reported fourth-quarter revenue of $5.04 billion, which missed average analyst estimates of $5.19 billion, according to Benzinga Pro. The company reported a quarterly net loss of 30 cents per share, which was in line with consensus estimates. 

"In the fourth quarter of 2022 we generated healthy free cash flow of $262 million. We also achieved our targeted unit cost reduction of $80 per net ton, which helped us to partially offset the impact of lagged index pricing," said Lourenco Goncalves, chairman, president and CEO of Cleveland-Cliffs.

"Entering 2023, as our fixed price contracts reset higher, our unit costs continue to decline, and sales volumes improve, we believe our quarterly Adjusted EBITDA should progressively improve, confirming our belief that the fourth quarter of 2022 was the inflection point for our profitability."

Cleveland-Cliffs announced increases to current spot market base prices for all carbon hot rolled, cold rolled and coated steel products by a minimum of $50 per net ton, effective immediately. The company's minimum base price for hot rolled steel is now $900 per net ton.

Cleveland-Cliffs also said it now expects a $115 per ton increase on its fixed price contracts. The company expects an approximately $2 billion reduction in Steelmaking COGS in 2023 compared to 2022, driven by normalized repair and maintenance expenses, higher production volume and lower input costs.

2023 steel shipment volumes are expected to be approximately 16 million net tons, compared to 14.8 million net tons in 2022.

Cleveland-Cliffs will host a conference call to discuss these results Tuesday morning at 10 a.m. ET.

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CLF Price Action: Cleveland-Cliffs has a 52-week high of $34.04 and a 52-week low of $11.83.

The stock was down 3.43% at $19.42 at time of publication, according to Benzinga Pro.

Photo: Janno Nivergall from Pixabay.