(RTTNews) - Mining company Cliffs Natural Resources Inc. (CLF: News ) on Thursday reported a 66% drop in profit for the third quarter from last year, hurt by lower volumes in its North American businesses and lower pricing for iron ore compared to a year ago. However, the company said it noted a marked improvement in business conditions and an improved outlook compared with the first half of 2009.

Third-Quarter Results

The Cleveland, Ohio-based company recorded net income attributable to shareholders for the third quarter of $58.8 million, or $0.45 per share, down from $174.9 million, or $1.61 per share, in the prior-year quarter. On average, eleven analysts polled by Thomson Reuters expected the company to report a loss of $0.07 per share for the quarter.

Consolidated revenues for the quarter decreased 44% to $666.4 million from $1.19 billion in the same period last year due to lower volumes in Cliffs' North American businesses and lower year-over-year pricing for iron ore. Analysts had a consensus revenue estimate for the quarter of $634.56 million.

Joseph Carrabba, chairman, president and chief executive officer of Cliffs Natural Resources, said, "Throughout the third quarter, we saw steadily improving demand from our North American iron ore and metallurgical coal customers. We have begun to increase production at most of our facilities and will continue to monitor the markets closely to meet demand. Sales volume expectations are increasing in North American Iron Ore and North American Coal, and Asia Pacific Iron Ore remains positioned for a record year in terms of tons shipped."

Selling, general and administrative expenses for the quarter dropped 32% to $28.4 million from $41.8 million in the year-ago period, aided by lower employment costs, including variable compensation. Gain on sale of assets during the quarter was $1.0 million, compared to a gain of $0.1 million a year ago.

Operating income for the quarter plunged to $80.5 million from $339.4 million in the same quarter last year, due to reduced sales volumes and price realizations.
At the end of the third quarter, Cliffs had $359.9 million of cash and cash equivalents, compared with $179.0 million at December 31, 2008. The company noted that it had no borrowings on its $600 million revolving credit facility at both points in time.

Segmental Results

North American Iron Ore

Third-quarter North American iron ore pellet sales volume was 5.5 million tons, down 31% from 8.0 million tons sold in the year-ago period. The decrease in sales volumes was due to lower demand for iron ore pellets. The company noted that while capacity utilization in the North American steel industry ramped to 59% at the end of the third quarter from 49% in the beginning of the quarter, the current level of approximately 60% remains well below those achieved throughout 2008.

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