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

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, one of the Region's largest industrial employers, pulled in a profit of $41 million, or 7 cents per share, in the first quarter.

The Cleveland-based steelmaker, which bought ArcelorMittal USA and AK Steel last year, pulled in $4 billion in consolidated revenue in the first quarter, up from $359 million in the first quarter of 2020.

Charges totaling $160 million ate into Cleveland-Cliffs' first-quarter profits. It paid $13 million in severance and acquisition-related costs, $66 million in debt extinguishment costs and $81 million to revalue inventory after acquiring nearly all of ArcelorMittal USA's operations.

“Q1 was just the first full quarter for Cleveland-Cliffs as a fully transformed business, and we have already accomplished a lot," said Chairman, President and CEO Lourenco Goncalves. "This being said, and with all the operational and commercial actions we have been implementing, the best will come through during the balance of 2021."

The 174-year-old company has long been one of the largest iron ore miners in the country. It became the largest flat-rolled steelmaker in North America last year by buying out customers AK Steel and ArcelorMittal USA, and now runs the steel mills in East Chicago, Burns Harbor, Gary, Riverdale and New Carlisle. 

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The company expects to bring in $4 billion in earnings this year, up from a previous projection of $3.5 billion. Because of strong market conditions, the steelmaker got better-than-expected contractual renewals and is expecting an average price of $1,100 for hot-rolled coil per ton for the last nine months of the year, up from an average of $900 per ton in the first quarter.

With favorable steel prices, Cleveland-Cliffs is now projecting $1.2 billion in EBITDA in the second quarter.

“As the year progresses, it will become abundantly clear that the pricing environment we are in — and will continue to benefit from going forward — is not a consequence of luck," he said. "Our expectation of $4 billion in adjusted EBITDA for the full-year is predicated on conservative pricing expectations relative to today’s pricing and the current forward curve. This will allow us to generate record levels of free cash flow and pay down a substantial amount of debt, allowing us to reach leverage of less than 1x by the end of the year."

In the first quarter, Cleveland-Cliffs sold 4.1 million tons of steel. About a third of it was coated, 28% hot-rolled, 18% cold-rolled, 7% plate, and 4% stainless and electrical.

Roughly a tenth of the sales were for miscellaneous products such as slabs and rail. 

A third of the company's sales were to the automotive market and another 32% went to the distributors and converters market.

“With our leadership position in the industry, we are as focused on profitability as we are on environmental stewardship and on supporting good-paying middle-class union jobs," he said. "Our commitment to reduce our environmental footprint will only further strengthen America's position as the cleanest steelmaking country among all the major steel producing nations. As a country responsible for just 2% of the global steel industry's GHG emissions, the United States has the right to produce steel and manufacture in America, instead of importing steel and allowing foreign polluting countries to export their full employment at the expense of the American worker."

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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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