Steelmaking and iron mining firm Cleveland-Cliffs Inc. has reported first-quarter 2023 results that include a revenue figure of $5.3 billion, which the Cleveland-based firm indicates represents a 6.0 percent increase from the $5.0 billion revenue figure in the prior quarter.
The firm, however, experienced a generally accepted accounting principals (GAAP) loss of $42 million in the first quarter. That narrowed from a $204 million loss in the final quarter of 2022. The company also says its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) figure for the first quarter was $243 million in the black.
Cleveland-Cliffs' steel shipments of nearly 4.1 million net tons in the first quarter of 2023 represented a 6.4 percent increase from the prior quarter, with increased automotive demand a key factor.
“In the first quarter, direct sales to automotive clients in our mix increased to 36 percent, confirming our view that our most important market is strong, and getting stronger,” President and CEO Lourenco Goncalves says.
”We expect that, throughout 2023, Cleveland-Cliffs should benefit from higher sales volumes to the automotive sector, and also from the increased prices we were able to achieve in our yearly renegotiations with each one of the car manufacturers that have Cleveland-Cliffs as their largest supplier of automotive steel. With the final batch of yearly fixed-price contracts—the ones dated April 1—successfully renewed, our outlook for a significant EBITDA expansion in the second quarter remains intact.”
First-quarter 2023 steel product sales volumes of 4.1 million net tons consisted of 36 percent hot-rolled, 29 percent coated, 15 percent cold-rolled, 5 percent plate, 4 percent stainless and electrical, and 11 percent other, including slabs and rail. In its initial comments and financial statements, the firm did not break out results for its Detroit-based Ferrous Processing & Trading (FPT) scrap recycling subsidiary.
Also in late April, Cleveland-Cliffs announced reaching what it calls a tentative agreement with the International Association of Machinists and Aerospace Workers (IAM) Local 1943 on a new 4-year agreement for its Middletown Works steelmaking operation in Ohio. The contract will be effective on May 15, 2023, and will cover approximately 2,100 hourly employees.
“The new labor agreement with our valued IAM employees at Middletown represents another win-win for Cliffs and our union partners,” Goncalves says. “Continued healthy partnerships like this one are the backbone of our future success, and we look forward to accomplishing our shared goals together.”
Looking ahead, he adds, “As we expect to continue to happen going forward, in Q1 we accomplished our goal of increasing steel shipments to above 4 million tons. Improved demand from our automotive clients has allowed us to be more selective when selling flat-rolled steel to the general marketplace, allowing us in Q1 to implement several price increases to non-contract clients. With further results from the cost side, we expect 2023 to be another year of great cash flow generation."
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