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Cleveland-Cliffs turned a $74 million profit on $2.3 billion in revenue in fourth quarter
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Cleveland-Cliffs turned a $74 million profit on $2.3 billion in revenue in fourth quarter

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Cleveland-Cliffs turns profit of $41 million on $4 billion in revenue

Cleveland-Cliffs' offices at the Indiana Harbor steel mill in East Chicago are shown. 

Cleveland-Cliffs made $74 million in profit in the fourth quarter, or 14 cents per share.

That compared to $63 million in net income or 23 cents per share in the same quarter a year earlier.

The Cleveland-based steelmaker, which has swollen in size due to its acquisitions of ArcelorMittal USA and AK Steel, brought in $2.3 billion in revenue in the fourth quarter, as compared to $534 million in revenue in the fourth quarter of 2019. The company pulled in $286 million in earnings before interest, taxes, depreciation and amortization, up from $111 million in EBITDA at the same time the previous year.

“Our strong fourth-quarter results offer just a sample of what we expect to accomplish in 2021, when we will show the full magnitude of the ArcelorMittal USA acquisition as well as the added contribution from our state-of-the-art direct reduction plant," Chairman, President and CEO Lourenco Goncalves said. "The integration of the ArcelorMittal USA assets into our portfolio is going extremely well, and we are benefiting substantially from our increased exposure to markets where we are currently seeing all-time highs in pricing. Our differentiated business model is set up perfectly to thrive in this environment."

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In 2020, Cleveland Cliffs pulled in $5.4 billion in revenue, up from $2 billion the previous year. It earned $353 million in EBITDA, up from $525 million in 2019.

The steelmaker still posted an annual loss of $81 million as compared to a $293 million profit the previous year. That was due entirely to $186 million in costs related to acquisition, severance and inventory step-up.

“Without question, 2020 was the most transformational year in our company's 173 year history. We completed two seminal acquisitions, AK Steel and ArcelorMittal USA, that transformed us from an iron ore miner into the largest flat-rolled steelmaker in North America," Goncalves said. "We also completed our Toledo direct reduction plant, which began operations in the fourth quarter. We were able to accomplish all of this while navigating through the COVID-19 pandemic and taking action to preserve the health and safety of our workforce and our company for the long-term.”

Cleveland-Cliffs now operates steel mills in East Chicago, Burns Harbor, Gary, Riverdale and New Carlisle. 

“We continue to manage supply in a disciplined manner, and will let our order book dictate our production levels, not adding volume for volume's sake. We also have made a serious and important commitment to the environment, laying out an aggressive plan to reduce greenhouse gas emissions by 25% by 2030. The opportunities that await us in 2021 and beyond are immense, and we look forward to putting on full display what this transformed business can accomplish.”

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The company pulled in steelmaking revenues of $2.1 billion in the fourth quarter, including $859 million to the auto market. It has about $2.6 billion in liquidity, including $200 million in cash.

“We expect the continuation of the favorable market environment we are in now, and an increasingly positive impact of the well-known lagged pricing mechanisms common in our steel sales," Goncalves said. "With the contribution of steel sales from Cleveland-Cliffs Steel LLC for a full quarter, we expect first-quarter 2021 steel product shipments of approximately four million net tons, and a significant improvement in first-quarter 2021 Adjusted EBITDA from the fourth quarter of 2020. Additionally positive, our second-quarter 2021 profitability should be enhanced even further by the impact of our initial sales of HBI to outside clients.”

The company plans to invest in its Northwest Indiana operations this year.

“Our full-year 2021 capital expenditures are expected to stay in the range of $600 million to $650 million," he said. "This includes sustaining capital of approximately $500 million and $60 million in the run-out of Toledo spend, with the remainder related to minor growth projects at Precision Partners, Cleveland Works, and Burns Harbor Works.”

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.

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