Cliffs Natural Resources Inc.(CLF) slashed its full-year 2012 thermal coal sales and production volume expectations from 1.1 million tons to about 800,000 tons at its Toney Fork No. 2 surface mine in southern West Virginia.The company reduced its outlook due to weak pricing of its thermal coal products.
The consumption of thermal coal declined significantly due to mild winters and considerably low natural gas prices. Due to the lower guidance, Cliffs will downsize 46 people employed on an hourly basis and 13 salaried people within its administrative offices, effective June 15, 2012.
The results of the company’s Toney Fork No. 2 surface mine operations are reported within its North American Coal business segment. The company, however, maintained its full-year 2012 North American metallurgical coal sales outlook of 6.0 million tons and production volumes of 5.5 million tons.
In April 2012, the company released its first-quarter 2012 results. The company posted earnings of $2.63 per share in the quarter, which was down from $3.11 a year ago. The results outshone the Zacks Consensus Estimate of $1.12 per share.
Sales for the quarter came in at $1,264.7 million, up 7% from $1,183.2 million in the prior-year quarter. The increase was driven by higher sales volumes across all the segments. However, revenues missed the Zacks Consensus Estimate of $1,333 million.
Sales Volumes in the North American Coal segment increased 12% to 1.4 million tons, led by significantly higher sales and production volumes from Cliffs’ low-volatile metallurgical coal mines. Revenues per ton inched down 1.8% to $121.61, driven by lower pricing for the company’s coal products. Cash cost per ton decreased 11% to $97.01 due to higher fixed costs.
Cliffs, which competes with CONSOL Energy Inc. (CNX) and Alpha Natural Resources, Inc. (ANR), currently retains a Zacks #3 Rank, reflecting a short-term (1 to 3 months) Hold rating. Currently, we have a long-term (more than 6 months) Neutral recommendation on the stock.