UPDATE 2-Cliffs Natural posts Q1 loss on lower iron ore, coal prices

Thu Apr 24, 2014 5:40pm EDT

(Adds CEO comment, details on weather impact, background; updates share price)

April 24 (Reuters) - Cliffs Natural Resources Inc, which is facing off against an activist investor that wants to break up the company, posted a first-quarter loss on Thursday on the back of lower market prices for iron ore and metallurgical coal.

The Cleveland, Ohio-based miner reported a net loss of $83 million, or 54 cents a share, in the three months to end-March from a net profit of $97 million, or 66 cents a share, in the same period a year earlier.

Revenue fell 18 percent to $940 million, hurt by the price declines as well as a 2 percent decrease in global iron ore sales volumes, which Cliffs blamed on extremely cold weather across the U.S. Midwest. The weather hurt production and slowed shipments on the Great Lakes.

"The first-quarter's winter weather in North America was some of the worst conditions we have experienced in 30 years," Cliffs' President and Chief Executive Gary Halverson said in a statement.

Despite the weather's impact, Cliffs said it was maintaining its full-year sales and production volumes for all business segments. Demand from the company's North American customers is "very strong," Cliffs said, reflecting lower-than-normal iron ore inventory stockpiles at its customers' facilities.

Cliffs' shares ended up 2.6 percent at $18.76 on Thursday before the earnings announcement. But its stock is down 80 percent in the past three years.

The company is being targeted by hedge fund Casablanca Capital, following several quarters of weak earnings and share performance.

Casablanca argues that Cliffs' international assets are weighing on its cash-generating U.S. business and should be spun off. The New York-based fund wants to install a new chief executive at Cliffs as well as a majority of new directors.

Weakness in the steel market has hit relatively high-cost iron ore suppliers like Cliffs hard. In recent quarters, the company's earnings have also been weighed down by higher-than-expected costs at its Bloom Lake mine in Canada.

After months of uncertainty, Cliffs earlier this year said it has decided to indefinitely suspend a planned expansion at Bloom Lake, and idle Wabush, another Canadian mine, slashing capital spending and cutting some 500 jobs. (Reporting by Nicole Mordant in Vancouver; editing by G Crosse and; Matthew Lewis)

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