Healthy Profits May Deter Cliff Natural Resources (CLF) Breakup Threats

NEW YORK (TheStreet) -- Cliff Natural Resources (CLF), the miner facing complications from an activist investor looking to tear the company apart, has posted profitability far above analyst consensus. Better-than-expected results and robust outlook could, at least temporarily, ward off calls to spin off its assets.

By midmorning, shares were up 6.9% to $23.40.

The iron ore and coal miner recorded fourth-quarter net income of $31 million, or 20 cents a share, far better than a loss of $1.6 billion, or $11.36 a share, suffered in the year-ago quarter.

Excluding one-time charges, per-share earnings of $1.22 a share were well above Thomson Reuters consensus of 77 cents a share.

"Through a company-wide focus to improve our cost profile and financial position, we ended the year with over a billion dollars in cash flow from operations, paid down the entire balance on our revolving credit facility, and achieved $1.5 billion in adjusted EBITDA," said CEO Gary Halverson in a statement.

Revenue for the three months to December was 1.3% lower than a year earlier at $1.5 billion. Sales were lower due to decreased market pricing and sales volumes for metallurgical coal, partially offset by a 10% increase in global seaborne iron ore.

Cliffs, like many in the industry, has been plagued by weakness in the steel industry and soft demand for iron ore in the past few quarters, inciting activist hedge fund Casablanca Capital to push for a breakup of its international business. The firm argued that the company's international assets, such as Canada-based mines Bloom Lake and Wabush, were a drag on its more profitable U.S. operations.

If you liked this article you might like

These Stocks Are Changing Course

Insiders Are Loading Up on Kite Pharma, Cliffs Natural Resources and More

China Has Enough Iron Ore to Build 13,000 Eiffel Towers, That's Bad News for These Stocks

'Trump Stocks' Charts Are Wilting

Steel Dynamics, Masimo, Canada Goose: 'Mad Money' Lightning Round