(Bloomberg) -- Cleveland-Cliffs Inc. tumbled by the most in six months after the steelmaker implied earnings to be much lower than analysts were forecasting amid turbulent times in the industry.
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The second-largest US steelmaker said Tuesday that it is being hit by higher input costs and maintenance activities, which led to adjusted earnings before items of $436 million in the third quarter, about 50% below analysts estimates. Adding to the pain was analysts noting that Cleveland-Cliff’s implied earnings guidance was well below Wall Street’s estimates.
Shares plunged 12% to $13.66 at 10:22 a.m. in New York, the biggest intraday decline since April 6.
Implied fourth-quarter adjusted earnings before items would be “$150 million to $200 million, versus our current $664 million and the Street’s $687 million,” Phil Gibbs, an analyst at Keybanc Capital Markets, wrote in a note to clients. He said half of the difference is due to lower sales while the rest is from higher conversion costs due to inflationary pressures.
It’s been a brutal run for the steel industry this year, in particular the last couple of months since executives, traders and other industry participants struck an optimistic tone at the largest annual North American steel conference in August. Benchmark prices in the US are down about 47% since January as surging inflation and weakening demand hit an industry that had an unprecedented 2021.
Nucor Corp., the country’s biggest steelmaker, last week reported earnings that missed analyst estimates, also warning of economic uncertainty and inflationary pressures.
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