Cliffs shares rise after better-than-expected 2Q

Cliffs shares rise after iron ore, coal shipments power much better-than-expected 2Q

Associated Press

NEW YORK (AP) -- Shares of Cliffs Natural Resources jumped 9 percent Friday after surprisingly strong coal and iron ore shipments pushed the miner's profit and revenue beyond Wall Street expectations.

THE SPARK: Net income was $133.1 million, or 87 cents per share, easily topping Wall Street expectations of 58 cents per share. Analysts were also surprised by the revenue figures in a tough year for the industry.

THE BIG PICTURE: Economic strife in Europe and a slowing economy in China have hit miners hard abroad, and cheap natural gas has depressed prices for coal at home. But miners have moved aggressively to slash costs, and Cilffs shipped more material than anyone had expected, given the global economic malaise.

THE ANALYSIS: Citi analyst Brian Yu wrote that profits from U.S. iron ore were helped because high volumes offset lower prices. Sales volumes for iron ore in Asia were higher than expected, too, he wrote. And the profit from North American coal was a surprise — he had expected a loss. But volumes were higher and costs to produce each ton were lower, he wrote.

SHARE ACTION: Cliffs Natural Resources Inc. rose $1.65, or 9 percent, to $20.03. They're still near the low end of their 52-week range of $15.41 to $46.83.

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