Despite the plunging sales, Cliffs Natural Resources managed to only lose a penny per share in the quarter.
Cliffs Natural Resources (NYSE:CLF) announced its second-quarter results late last night. The iron ore producer reported revenue of $1.1 billion and a net loss of $2 million or a penny per share. The company's revenue plunged 26% over last year's second quarter as a result of decreased market pricing for both iron ore and metallurgical coal. On top of that the company experienced a 24% decrease in sales volumes for U.S. iron ore.
Cliffs Natural Resources CEO Gary Halverson noted in the company's press release that it took, "prudent and decisive action to optimize the business in the face of continued commodity pricing pressure." That action resulted in the company slashing its capital spending by 77% or $210 million from last year's second quarter. Further, the company also cut its SG&A and exploration expenses by 24% from the year ago quarter.
These actions, when combined with an income tax benefit of $69 million, still couldn't help Cliffs Natural Resources turn a profit in the quarter. In fact, the company's results are well off last year's second quarter when it earned $133 million, or $0.82 per share. Further, the company used $41 million in cash from operations this quarter as opposed to generating $414 million of cash in last year's second quarter.
All that being said, Cliffs Natural Resources sees demand for its steelmaking raw materials being supported by rising demand due to improvements in the U.S. economy. Further, the company sees Chinese demand for its products remaining high as the country remains committed to hitting a real GDP growth rate of about 7.5%.