CLIFFS NATURAL RESOURCES

Terms	2011	2012	Change
Revenue	5,800.0	5,700.0	-1.7%
Net Income	1,600.0	-937.4	-158.6%
Net Operating cash flow	2,300.0	514.5	-77.6%
Total Assets	1,300.0	296.4	-77.2%
Inventory	692.6	725.6	4.8%
Receivable	386.3	456.7	18.2%

Business Sector

The company is a major global company on Iron ore mining and coal mining which is managing five mines of iron ore at Minnesota and Michigan and also an iron ore mining complex in Western Australia. The business is driven by Iron ore demand for producing steel product in integrated steel industry at USA and CHINA, the company has 57 % of total iron ore US Capacity. The company also operates metallurgical mine and thermal coal mine in West Virginia. 

My Analysis

From the table at above it can be analyzed that revenue decrease 1.7 % at 2012 compared to 2011. At the bottom, Net income dropped 158.6 %. Net income dropped faster than revenue because of decline in Gross Margin. COGS in 2012 is higher, it is 75.4 % of revenue in 2012, more expensive than COGS in 2011 at 65.5 % of revenue. The volatile price of iron ore causes lower income.

Inventory and receivable are increase, inverse with revenue which decline slightly at 1.7 %. Each increase is 4.8 % and 18.3 %.  For account receivable, the increase may be happened because of bad debt of the customer. It needs more information and investigation to figure out, because revenue at same period decreases at 1.7 %.

The company is facing iron ore price which is volatile. In order to develop seaborne iron ore market, the company conducts expansion in Bloom lake in eastern canada. That investment is at phase II, in Construction process. But the bad news appears, the project at Bloom Lake is put off because of lack of cash flow. The creditors suspend the loan because it is worse in its Loan to EBITDA and the iron ore price is volatile.

For Iron ore, it concentrates for three biggest clients, Arcelor Mittal, Algoma and Severstal.  

Future Plan

The company will make plan startup date for project at bloom lake. in 2009 - 2011 the company has good trend in its sales growth. the company increase revenue approximately two billion in each year during that period.