Cleveland-Cliffs Projects Turnaround for 2026 After Challenging Year Marked by Reduced Losses and Operational Resets
Adjusted Losses Narrow As Company Optimizes Operations
Cleveland-Cliffs’ 2025 results put numbers to a tough year for North America’s largest flat-rolled steel producer, but also signal a company readying for a rebound. The steelmaker posted a fourth-quarter GAAP net loss of $235 million (or $0.44 per share), narrowing significantly from the $434 million loss in last year's fourth quarter. Revenues remained flat year-over-year at $4.3 billion in Q4, while full-year sales slipped to $18.6 billion from $19.2 billion. On an adjusted basis, losses were also trimmed: Q4 adjusted net loss per share improved to $0.43, and full-year adjusted loss was $2.48 per share, down from $0.74 in 2024.
Cost Controls and Contract Wins Help Stabilize Performance
Amid persistent weakness in automotive steel demand, a value-destructive slab contract, and Canadian market headwinds, Cleveland-Cliffs took aggressive action. The company exited non-core assets, reduced unit costs, secured multi-year deals across its automotive customer base, and lowered its capital spending. The financial tables below illustrate key improvements despite overall losses:
| Metric | Q4 2025 | Q4 2024 | Full Year 2025 | Full Year 2024 |
|---|---|---|---|---|
| Revenues ($B) | 4.3 | 4.3 | 18.6 | 19.2 |
| Steel Shipments (M net tons) | 3.8 | 3.8 | 16.2 | 15.6 |
| GAAP Net Loss ($M) | 235 | 434 | 1,428 | 714 |
| Adjusted EBITDA ($M) | (21) | (81) | 37 | 773 |
| Average Selling Price ($/net ton) | 993 | 976 | 1,005 | 1,081 |
Positive Shifts in Market Mix and Strategic Actions
The company saw improved mix in its steel shipments, with 42% hot-rolled and 28% coated products leading in Q4. Full-year shipments leaned similarly, with strong presence in hot-rolled and value-added coated products. Management also highlighted a record safety year—the lowest total incident rate since entering the steel business—offering operational confidence for investors.
2026 Outlook: Expectations Signal Improved Profitability
Leadership expects material improvements in 2026. Shipment volumes should grow to 16.5–17.0 million net tons, and unit costs are projected to drop by about $10/ton, reflecting both operational discipline and a richer sales mix post-contract expiration. Capital expenditures are budgeted down to $700 million and SG&A to about $575 million. These efficiencies are positioned against a U.S. trade environment the CEO describes as “constructive,” with positive momentum for domestic steel. Notably, a possible strategic partnership with POSCO is advancing, with both companies targeting an agreement in the first half of 2026.
Key 2026 Expectations
| Item | 2026 Guidance |
|---|---|
| Steel Shipments (M net tons) | 16.5 – 17.0 |
| Unit Cost Reduction ($/net ton) | ~10 lower |
| CapEx ($M) | 700 |
| SG&A ($M) | 575 |
| Depreciation & Amortization ($M) | 1,100 |
Balance Sheet Remains Resilient Despite Headwinds
Cleveland-Cliffs closed 2025 with $3.3 billion in liquidity, cash balances in line with prior years, and long-term debt increased modestly to $7.25 billion. Working capital was managed conservatively as inventories came down and accounts payable fell. The measures taken in 2025 have preserved financial flexibility for a changing steel demand landscape in 2026.
Takeaway: Setup for a Rebound, But Execution Will Be Key
With industry demand conditions showing signs of improvement—especially in the automotive sector—Cleveland-Cliffs appears positioned for a rebound. New contracts, cost reductions, capital discipline, and a potential partnership with POSCO underscore the company’s strategy. Still, the market will be watching for follow-through: the true test will be how quickly these operational gains translate into sustained profitability and growth in 2026 and beyond.
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