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Cliffs Natural Shares Plunge 10% As Dividend Slashed 76%; Q4 Results Top View

Shares of Cliffs Natural Resources, Inc. (CLF) plunged more than 10 percent in extended trade on Wednesday after the mining company said its board has slashed quarterly dividend by 76 percent.

The company also reported a loss for the fourth quarter compared to a profit last year, hurt by hefty charges. However, both adjusted earnings per share and quarterly revenues came in above analysts' expectations.

Separately, Cliffs announced that its board has approved a meaningful reduction of 76 percent in its quarterly cash dividend rate to $0.15 from $0.625 per common share, payable on March 1 to shareholders of record as of the close of business on February 22, 2013.

The Cleveland, Ohio-based company reported a net loss of $1.63 million or $11.36 per share, compared to net income of $185.4 million or $1.30 per share in the prior-year quarter.

Results for the latest quarter primarily includes a non-cash impairment charges of about $1.05 billion in goodwill related to Cliffs' 2011 acquisition of Consolidated Thompson Iron Mines Ltd., as well as $365 million related to Amapa.

Excluding items, adjusted net income for the quarter was $88.8 million or $0.62 per share, compared to $213.2 million or $1.49 per share in the year-ago quarter, reflecting lower sales margin.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.

Consolidated revenues for the quarter declined to $1.54 billion from $1.60 billion in the same quarter last year. Fifteen Wall Street analysts had a consensus revenue estimate of $1.53 billion.

The decline in revenues was primarily attributable to a 14 percent decline in year-over-year pricing for seaborne iron ore and a 15 percent increase in cost of goods sold amid increased sales volumes, which contributed to higher employment-related costs, mining and maintenance expenses.

Consolidated sales margin dropped 50 percent to $239 million from $480 million in the year-ago quarter.

Fiscal 2012, the company reported a net loss of $899.4 million or $6.32 per share, compared to net income of $1.62 billion or $11.48 per share in the prior year. Excluding items, adjusted net income for the year was $493 million or $3.45 per share, compared to $1.65 billion or $11.68 per share in the year ago. Revenues for the full year declined 11 percent to $5.87 billion from the previous year.

Street was looking for full-year 2012 earnings of $3.60 per share on annual revenues of $5.95 billion.

Looking ahead to fiscal 2013, Cliffs said it expects the end markets for its products to remain healthy, primarily driven by China's continued demand for steelmaking raw materials. Cliffs also anticipates its global iron ore sales to be relatively flat with last year at about 40 million tons, with pricing for the commodities it sells to remain volatile.

Meanwhile, Cliffs is increasing its 2013 capital expenditures budget to between $800 million and $850 million from its previous expectation of $700 million to $800 million due to additional investments in its Eastern Canadian Iron Ore business segment.

CLF closed Tuesday's regular trading session at $36.61, up $0.17 or 0.47% on a volume of 8.28 million shares. However, the stock plunged $3.71 or 10.13% in after-hours trading.

by RTT Staff Writer

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