Cleveland-Cliffs Inc.
Clf Steel 4

Cleveland-Cliffs Forecasting 8% Shipment Growth for ’23

Feb. 14, 2023
CEO Lourenco Goncalves says demand from auto makers should grow steadily during the year.

The leaders of Cleveland-Cliffs Inc. expect their shipment volumes to grow at least 8% this year as automotive customers ramp up production.

Speaking to analysts after Cleveland-Cliffs reported fourth-quarter results, Chairman, President and CEO Lourenco Goncalves said the company’s January shipments to auto manufacturers were the best in nearly a year and added that he expects his team’s numbers to grow steadily throughout 2023. In all, Cleveland-Cliffs executives are forecasting shipment volumes of about 16 million net tons versus 14.8 million in 2022.

Combined with better pricing—recently concluded negotiations will lift the 2023 per-ton selling price about $115 from last year—and lower operating costs, that will also steadily grow the company’s bottom line. Cleveland-Cliffs posted a fourth-quarter net loss of $204 million on revenues of a little more than $5 billion. In the last three months of 2021, the company had booked an $898 million profit on more than $5.3 billion in sales. Input costs were the swing factor in late 2022, growing by more than a quarter from the prior-year period to $5.1 billion.

CFO Celso Goncalves told analysts that dynamic will shift back in his team’s favor this year as it aims to lower its overall cost of goods sold by $2 billion. Lower capital spending of $700 million to $750 million versus $943 million last year as well as lower energy costs (Cleveland-Cliffs should spend $300 million less this year on natural gas) and pension plan contributions also will contribute.

“We are already operating at a much lower cost than what our recent [cost of goods sold line item] indicates,” Celso Goncalves said.

Asked about the things that need to go right for Cleveland-Cliffs to hit its full-year shipments target, Lourenco Goncalves sounded very optimistic. Pointing out that auto makers will buy about 5 million tons of steel directly from the company and another 2 million tons via processors or service centers, he said the rest of Cleveland-Cliffs’ business unit need only hit their 2022 numbers to get the whole company to its target.

“I don’t think 16M is any stretch,” he said.

Shares of Cleveland-Cliffs (Ticker: CLF) were down about 2% to $19.75 in morning trading Feb. 14. Over the past six months, they are up slightly.

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