Heavy Losses, but Significant Improvement from the Previous Quarter

Cleveland-Cliffs Inc., a leading North America-based steel producer focused on value-added sheet products, particularly for the automotive industry, reported its second-quarter 2025 results. The report, published on July 21, 2025, reveals a picture of heavy losses but at the same time shows strong signs of operational and financial improvement. The company recorded a GAAP net loss of $470 million, which included $323 million in non-recurring charges related to footprint optimization initiatives and idled facilities. It is important to note that this loss was recorded despite revenues of $4.9 billion in the second quarter, which were higher than the $4.6 billion in revenues in the first quarter of 2025. The company’s adjusted net loss significantly narrowed from $456 million in the first quarter to $247 million in the second quarter. In addition, a $271 million improvement was recorded in adjusted EBITDA, which rose from a loss of $174 million in the first quarter to a profit of $97 million in the second quarter. A particularly impressive figure is the record steel shipments of 4.3 million net tons during this quarter. In addition, the company reported a reduction of $15 per net ton in steel unit costs compared to the first quarter of 2025, which helps to increase operational profitability.

Optimization Plans and Reliance on a Strong Domestic Market

The Chairman, President, and CEO of Cleveland-Cliffs, Lourenco Goncalves, emphasized that the second-quarter results prove that the company’s operational optimization initiatives, announced a few months ago, are already generating a positive impact on both costs and revenues. He noted that the company’s good cost performance in Q2 will be even further amplified in the third and fourth quarters of 2025, with further expected improvements in adjusted EBITDA as a result. Goncalves also noted with satisfaction that the company significantly reduced inventories, which led to a meaningful release of working capital during the quarter. He added that the company is on the verge of returning to generating meaningful free cash flow and rapidly reducing debt. Furthermore, he referred to the end of a long-standing steel supply contract with a competitor, which he claimed had become a negative contributor to EBITDA due to abnormally low index-based prices in recent months. He stated that this contract would not be extended, and its upcoming end is expected to significantly improve the company’s profitability. These figures, along with liquidity of $2.7 billion as of June 30, 2025, show that the company is in a good position to continue implementing its optimization and growth plans.

Competitive Advantage in a New Political Reality

A significant part of the CEO’s optimism stems from Cleveland-Cliffs’ unique positioning in the American market, particularly against the backdrop of government policy. The company is a major steel supplier to automotive manufacturers in the United States. Goncalves noted that the Trump Administration continues to show strong support for both the domestic steel and automotive industries. He explained that the company has already started to see the positive impact of tariffs on imports, which protect domestic manufacturing, American jobs, and national security. According to him, this trend is expected to continue and contribute to the resurgence of the American automotive industry, supported by a thriving domestic steel industry. The CEO concluded by stating that foreign competitors who want to participate in the attractive U.S. market need to acquire steel production capacity within the country. He emphasized that the company’s assets, its core business, and its geographic footprint are uniquely positioned to benefit from this new reality. Sales to the automotive market constituted 26% of the company’s steel revenues in the second quarter, while sales to the infrastructure and manufacturing markets accounted for 31%, and sales to distributors and converters represented 30%. These figures highlight the strategic importance of these sectors for the company.

Looking Ahead: Optimization and Recovery on the Horizon

The company has updated its guidance for the full year, with a projected reduction in capital expenditures from $625 million to approximately $600 million, and in selling, general, and administrative expenses from $600 million to approximately $575 million. These changes indicate the continuation of the trend toward efficiency and conservative financial management. Although the company expects an increase in depreciation expenses from $1.1 billion to approximately $1.2 billion due to accelerated depreciation from idled facilities, it maintains its forecast of a reduction in steel unit costs of approximately $50 per net ton compared to 2024. Cleveland-Cliffs benefits from liquidity of $2.7 billion as of June 30, 2025, and is ready to continue implementing its plans. The quarterly report shows that while the company faces challenges, it also demonstrates a capacity for recovery and growth, which will be a true test of its long-term strategy. Investors can monitor the company’s progress through future reports and verify that it is meeting the goals it has set for itself.

Unique Positioning and Future Opportunities

The Cleveland-Cliffs quarterly report not only presents financial data but also provides an insight into the company’s long-term strategy. The company is uniquely positioned as a publicly traded, America-based company headquartered in Cleveland, Ohio. It focuses on automotive steels, electrical steels, stainless, and plate. The company is vertically integrated from the mining of iron ore and the production of pellets and direct reduced iron to the processing of ferrous scrap, primary steelmaking, and downstream finishing, stamping, tooling, and tubing. The company employs approximately 30,000 people across its operations in the United States and Canada. CEO Goncalves once again emphasized the importance of this positioning in the current reality, where the U.S. government is keen on strengthening domestic industry. Cleveland-Cliffs’ ability to control the entire value chain, from mining to the finished product, gives it a distinct competitive advantage and allows it to be flexible in responding to market changes. This advantage, combined with the supportive political environment, places the company in an attractive position for investors and business partners.