Cleveland-Cliffs shares down on wider-than-expected loss, revenue miss

February 25, 2025 09:55 PM AEDT | By Investing

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Cleveland-Cliffs shares down on wider-than-expected loss, revenue miss

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Investing.com -- Cleveland-Cliffs Inc (NYSE:CLF) posted a wider-than-expected fourth-quarter loss, also revenue came in below Wall Street estimates, sending its shares down more than 3% in premarket trading Tuesday.

The steelmaker reported an adjusted loss per share of $0.68 for the quarter, missing analysts’ expectations of a $0.46 loss. Revenue also fell short at $4.3 billion, compared to the consensus estimate of $4.54 billion.

The company reported an adjusted EBITDA loss of $81 million, missing the Visible Alpha consensus of a $61 million loss, though it was slightly better than the company's preliminary guide of a $85 million loss.

Cleveland also posted a $677 million cash burn in the quarter.

"While Q4's EBITDA loss was already telegraphed, its steep $677M cash burn in the qtr was a surprise," Wolfe Research analysts said in a note. "Ultimately steel prices recovering into 2025 should be investor's focal point, with hikes needed to offset higher borrowing costs and 2026E capex."

The investment bank reiterated an Underperform rating on Cleveland shares.

Cleveland-Cliffs said it expects steel unit cost reductions of around $40 per net ton in 2025 compared to 2024. The company, which now includes Canadian steelmaker Stelco (TSX:STLC) in its outlook, forecasts capital expenditures of about $700 million and selling, general, and administrative expenses of roughly $625 million.

"CLF will focus on deleveraging, with 100% of free cash flow to be used towards debt repayments until its 2.5x net debt / TTM EBITDA target is reached," Bank of America (NYSE:BAC) analysts noted.

"Given its higher fixed cost structure, CLF should see substantial benefit from the ongoing rebound in U.S flat-rolled steel pricing," they added.

The company also projected depreciation, depletion, and amortization of approximately $1.1 billion, along with cash pension and other post-employment benefits (OPEB) payments and contributions of about $150 million for the full year.

Pratyush Thakur contributed to this report.

This article first appeared in Investing.com

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