Cleveland-Cliffs Q1 2025: Key Contradictions in Demand Outlook, Financial Performance, and Cost Strategies

2024 demand and 2025 outlook, 2024 financial performance, cost savings and EBITDA impact, CapEx adjustments and their effect on EBITDA, and cost reduction timing and extent are the key contradictions discussed in Cleveland-Cliffs' latest 2025Q1 earnings call.



Earnings and Market Conditions:
- Cleveland-Cliffs reported an adjusted EBITDA loss of $174 million for Q1 2025, reflecting worse-than-expected EBITDA and cash flow.
- The lagged impact of low steel prices during Q4 2024 and early 2025, exacerbated by underperforming non-core assets, led to weak results.

Automotive Industry and Strategic Focus:
- Cliffs' automotive business is expected to benefit from $250 million to $500 million in EBITDA annually, starting in the second half of 2025.
- The focus on sourcing automotive steel from domestic producers, driven by the Trump administration's support for reshoring automotive production, is a key factor.

Operational Changes and Cost Optimization:
- The company announced $300 million in annual savings by idling several non-core assets, effective from the second half of 2025.
- This action aims to reduce fixed costs and improve operating efficiency, crucial for returning to profitability.

Asset Strategy and Divestiture Plans:
- Cleveland-Cliffs is considering unsolicited offers for some non-core assets, potentially worth several billion dollars.
- These transactions would help reduce debt and improve financial metrics, given the company's cash flow and borrowing structure.