Cleveland-Cliff’s Goncalves Sees ‘Significant Uptick’ in Market, Leaves Door Wide Open For More M&A
Cleveland-Cliffs Inc. has started 2025 in much better fashion than how it ended last year, Chairman, President and CEO Lourenco Goncalves told analysts Feb. 25 after he and his team reported a fourth-quarter net loss of $434 million.
On a conference call discussing those results and his outlook, Goncalves pointed to lower U.S. automobile production and price cuts from several competitors—including some peers he accused of “domestic dumping”—as drivers of those losses. But he also looked to spin things forward with a more positive view: Cliffs’ acquisition last fall of Canada’s Stelco Holdings Inc. has lowered the company’s exposure to the auto sector and increased its ability to capitalize on rising spot prices, he said.
On top of that, “the market is certainly pointing in our favor” as prices for scrap and hot-rolled coil steel have risen smartly in recent weeks and automotive and other customers have beefed up their orders with Cliffs. This “significant uptick in demand” should quickly flow through to the company’s profitability, he added.
Speaking to the aggressive pricing of some competitors, Goncalves said some of the orders from auto manufacturers is business returning from peers who last year aggressively priced their contracts and cut into their profitability. Those moves, he suggested later in the call, could open the door for Cliffs—which in recent years also has acquired AK Steel and the U.S. operations of Arcelor Mittal—to bulk up further.
“Let’s see what happens. There’s a guy that says that a lot,” Goncalves said, referencing President Donald Trump, after being asked if the state of Cliffs’ balance sheet might hinder other acquisitions. “When he says that, the ones that are on the receiving end, they usually know that they’re in a bad spot. Let’s see what happens.”
Cliffs posted a fourth-quarter operating loss of $465 million on revenues of more than $4.3 billion; in the same period of 2023, those numbers were a loss of $100 million and $5.1 billion, respectively. The company shipped about 3,800 net tons of steel products during the quarter, down from a little more than 4,000 in late 2023.
Investors didn’t much care for those Q4 numbers of Goncalves’ early 2025 outlook: Around noon Eastern, shares of Cliffs (Ticker: CLF) were down more than 6% to $10.44, although that was up significantly from the day’s low of $10.01.. Over the past six months, the stock has now lost about 20% of its value, trimming the company’s market capitalization to about $5.1 billion.
