TORONTO (miningweekly.com) – Global miner Cliffs Natural Resources has in the past 12 months managed a return to profitability despite the iron-ore price declining this month to its lowest level since at least 2009, as the largest producers, such as Rio Tinto and BHP Billiton, boosted output into an oversupplied market.

For the second quarter ended June, Cliffs, which was a significant supplier of iron-ore pellets to the US steel industry, recorded net income attributable to common shareholders of $60-million, or $0.39 a diluted share, compared with a net loss of $2-million, or $0.02 a diluted share, recorded in the same period of 2014.

The return to profit was largely attributable to a 22% decline in the cost of goods sold to $441-million, while selling, general and administrative (SG&A) expenses fell 25% to $31-million, as a result of the reduced headcount and other cost-cutting initiatives.

"Over the past 12 months we have taken actions to protect the long-term viability of Cliffs. These include the elimination of a revolver with restrictive covenants, the removal of lossmaking Eastern Canadian Iron Ore, the divestiture of several noncore assets, the significant reduction of SG&A and capital expenditures, and the optimisation of costs in US Iron Ore and Asia Pacific Iron Ore,” Cliffs chairperson, president and CEO Lourenco Goncalves advised when announcing the company's results on Wednesday.

Under pressure from the continued weak iron-ore prices, second-quarter consolidated revenues of $498-million were down 33% from the previous year's $748-million.

The US iron-ore pellet sales volume in the quarter declined 2% to 4.2-million tons, as reduced year-over-year export sales and lower demand by US mills were partially offset by improved shipping conditions on the Great Lakes.

In the US, Cliffs had continued to face weak demand for iron-ore. Despite believing that conditions would improve, the company lowered its North American sales forecast.

For 2015, Cliffs lowered its full-year sales and production volume guidance by 1.5-million tons to 19-million tons of iron-ore pellets, reflecting currently low capacity utilisation rates among Cliffs' US steel customers, which were mainly attributed to heavy imported steel penetration. The company expected these conditions to improve in the second half, but was basing the sales forecast on current nominations.

Over the last 12 months, Cliffs’ NYSE-listed shares had lost more than 83% in value. However, the stock closed in positive territory on Wednesday, up 1.68% at $3.02 apiece, amid heavy trading volumes.