I know these markets are brutal, and this company is hardly alone in trading near the bottom of a cavernous one-year trading range, but these cliffs of coal and iron ore are a central artery to the heart of the world's steel industry.
Perched on top of the world's industrial supply chain, miners like Cliffs Natural Resources
Under trying conditions, Cliffs logged $53.9 million in net income for the quarter despite a $209.1 million set of charges and writedowns. The company sacrificed some $90 million to back out of the Alpha Natural Resources
Gazing past the investment losses and currency hedges gone awry, Cliffs' recorded a 30% increase in cash from operations in the fourth quarter, and a 195% boost for all of 2008, to $853 million. Despite a very tough fourth quarter for the industry, Cliffs managed to increase its overall sales margin by 75% on strong iron ore prices, easily offsetting slightly negative margins from the North American coal unit. The company is scaling back production substantially, which will likely keep costs elevated, but management has demonstrated its adaptive prowess in the past.
With very positive cash flow, $179 million in cash and equivalents, and $750 million in available credit, I consider Cliffs Natural Resources among the best-positioned raw material miners to ride out this acute disruption to the markets of steelmakers like United States Steel
In my opinion, Peabody Energy