How CLF (Cleveland-Cliffs) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a steel producer like Cleveland-Cliffs makes money is essential for investors and anyone interested in the business of steel and iron ore. In this post, we break down Cleveland-Cliffs's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

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Quick Cleveland-Cliffs Overview

Cleveland-Cliffs operates as a major integrated steel producer in North America, manufacturing flat-rolled steel, stainless steel, and iron ore pellets primarily for automotive, infrastructure, and appliance sectors. Revenue comes from sales of steel products and raw materials like iron ore pellets, with a focus on vertically integrated operations from mining to finished steel. The company benefits from its position as a key supplier to U.S. automakers and construction industries.

Revenue Breakdown

• Total Revenue (Q4 2025): $4.31B (-0.3% YoY)
  • Steel products and iron ore pellets: $4.31B (100% of total)
  • Growth is powered by stable demand in automotive and infrastructure, though offset by pricing pressures in the cyclical steel market.

Gross Profit and Margins

• Gross Profit: $0.21B (5.0% gross margin)
  • Cost of Revenue: $4.52B (-1.7% YoY)
  • Cleveland-Cliffs maintains moderate margins due to its vertically integrated model, which controls raw material costs through captive iron ore production, though high energy and input costs remain challenges.
• Most costs come from raw materials, labor, energy, and production overhead in steelmaking.

Operating Income and Expenses

• Operating Income: Not specified (inferred challenged by negative gross position offset by low opex)
• Operating Expenses: $0.02B (0.0% YoY), with SG&A at $0.14B (+3.6% YoY, 3.3% of revenue) — primarily administrative, sales, and distribution costs tied to operations.
  • R&D: Not specified
  • SG&A: $0.14B (+3.6% YoY, 3.3% of revenue) — covers general management, selling, and overhead.
  • Cleveland-Cliffs continues to control costs while investing in operational efficiencies and capacity expansions amid market volatility.

Net Income

• Pre-Tax Income: Not specified
• Income Tax: Not specified (0% effective tax rate implied by net positive)
• Net Income: $0.25B (-44.3% YoY, 5.8% net margin)
• Cleveland-Cliffs converts a moderate portion of sales into profit due to operational leverage, non-operating gains, and efficiency in a low-margin industry.

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What Drives Cleveland-Cliffs's Money Machine?

• Steel product sales: 100% of revenue, driven by automotive sheet steel and iron ore pellets supplied to internal mills and external customers.
• Vertical integration: Controls ~70% of iron ore needs, reducing exposure to spot prices and stabilizing costs.
• Capacity utilization: Investments in blast furnaces and EAF upgrades to boost output efficiency.
• Future growth areas: Electrification and sustainable steel production, though not yet profitable amid transition costs.

Visualizing Cleveland-Cliffs's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially cost of revenue) taking the largest chunk.
• Even after significant costs, 5.8% of revenue drops to the bottom line, boosted by other non-operating items.

Key Takeaways

• Cleveland-Cliffs's money comes overwhelmingly from steel products and iron ore
• Moderate gross and net margins illustrate the power of Cleveland-Cliffs's vertically integrated model
• Heavy investment in operations, balanced by efficiency in operating costs
• Ongoing growth is driven by automotive demand and infrastructure spending

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FAQ About Cleveland-Cliffs's Income Statement

1. What is the main source of Cleveland-Cliffs's revenue in 2025?

Cleveland-Cliffs generates over 100% of its revenue from steel products and iron ore pellets.

2. How profitable is Cleveland-Cliffs in Q4 2025?

Cleveland-Cliffs reported net income of $0.25B in Q4 2025, with a net margin of approximately 5.8%, reflecting moderate profitability driven by cost controls and non-operating gains despite revenue dip.

3. What are the largest expense categories for Cleveland-Cliffs?

The biggest expenses on Cleveland-Cliffs's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached not specified in Q4 2025, as Cleveland-Cliffs prioritizes operational upgrades.

4. Why does other items operate at a loss?

Other, despite generating not specified in revenue, posted an expense of over $0.42B in Q4 2025. This is because Cleveland-Cliffs aggressively invests in non-core adjustments and one-time items, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does Cleveland-Cliffs's effective tax rate compare to previous years?

Cleveland-Cliffs's effective tax rate in Q4 2025 was 0%, consistent with previous years. This low rate is primarily due to tax benefits from operational losses and structuring.