[Auto] Cleveland-Cliffs CEO sees company primed to benefit from eventual auto recovery

[FazzNoth]

 

Cleveland-Cliffs (NYSE:CLF) tumbled nearly 10% Friday as Q4 results were hurt because the steelmaker decided to take advantage of the current lull in auto production to speed up needed maintenance projects.

Cleveland-Cliffs is the largest supplier of steel to the U.S. auto sector by a wide margin, so getting the maintenance projects out of the way should place the company in prime position if auto production volumes recover later in the year.

But in the meantime, the company reported Q4 adjusted EBITDA jumped to $1.46B from $286M in the year-earlier quarter but well below Wall Street estimates, and full-year EBITDA totaled $5.26B, below CEO Lourenco Goncalves' own October estimate of $5.5B.

Goncalves remains upbeat about the outlook for the steel market in 2022, telling today's earnings conference call that Cleveland-Cliffs already is seeing deliveries to automotive clients improve and that the chip shortage should improve this year.

The company also forecasts its average selling price will rise to ~$1,225/ton in 2022 from $1,187/ton in 2021.

Goncalves said on the call that he wants to increase the amount of fixed-price contracts above the current 45% of the company's sales, and that the bulk of annual fixed contracts are set to reprice at significantly higher levels this year.

The steel sector has seen benchmark prices tumble more than 40% since hitting all-time highs in August; the head of Canada's top steelmaker last month warned of "significant oversupply and significant shrinkage of demand" affecting the North American market.

https://seekingalpha.com/news/3799392-cleveland-cliffs-ceo-sees-company-primed-to-benefit-from-eventual-auto-recovery