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SEC filingCleveland-Cliffs' Q2 2025 results declined sharply due to lower automotive demand and idling charges, partially offset by Stelco acquisition benefits.
Cleveland-Cliffs reported a challenging second quarter of 2025, with consolidated revenues decreasing by $158 million (3%) to $4.77 billion compared to the prior-year period. The decline was primarily driven by a $211 million (14%) drop in direct automotive market revenues due to weaker demand, partially offset by incremental tons from the Stelco acquisition. Gross margin fell sharply by $370 million, impacted by a $200 million decrease in average selling price (especially from lower automotive mix and added hot-rolled tons from Stelco) and $120 million in additional depreciation expense from the indefinite idling of Conshohocken and Riverdale facilities. Net loss widened to $470 million from a $9 million profit in Q2 2024, reflecting the margin compression and higher restructuring charges.
For the six-month period, revenues declined 7% to $8.41 billion, with gross margin down $1.04 billion. The company recorded $86 million in restructuring charges and $39 million in asset impairment for Q2 2025, primarily related to the indefinite idling of the Steelton rail production facility. Interest expense increased $80 million due to higher outstanding borrowings, while income tax benefit rose $133 million driven by larger pre-tax losses.
The Steelmaking segment, which represents the vast majority of operations, saw revenues decline 3% to $4.77 billion in Q2 2025. Adjusted EBITDA for the segment dropped $225 million to $83 million, with gross margin percentage turning negative at -5% compared to +3% in the prior year. Shipments increased 8% to 4.29 million net tons, driven by Stelco volumes, but average selling price per ton fell from $1,125 to $1,015. The segment faced headwinds from lower automotive mix, higher depreciation from idled assets, and $60 million in idled facilities charges. The company's strategic decision to idle six operations (Dearborn Works, Conshohocken, Riverdale, Steelton, Minorca mine, and partial Hibbing Taconite) aims to streamline operations and enhance efficiency, with minimal expected impact on flat-rolled steel output.
Management expects domestic steel demand to grow, supported by recently implemented steel and automotive tariffs, improving end-user demand, and manufacturing on-shoring. The company anticipates benefiting from the 25% tariff on automobile imports and expects healthier domestic vehicle production. Key strategic priorities include maximizing commercial strengths in automotive steel, optimizing the fully-integrated steelmaking footprint, capturing synergies from the Stelco acquisition, and maintaining financial flexibility. The company expects to generate healthy free cash flow in coming years to deleverage its balance sheet, with approximately $3.2 billion of secured debt capacity and $2.7 billion in liquidity as of June 30, 2025. Capital expenditures for the next 12 months are anticipated to be approximately $700 million, primarily for sustaining capital.