Cleveland-Cliffs (CLF) saw its stock plunge by 17% on Thursday after the steel giant revealed plans to significantly cut production and reduce capital expenditures to revitalize operations.

The company announced it will "fully or partially idle six facilities" to refine its operational strategy, pivot away from unprofitable segments, and free up excess working capital. These strategic moves are projected to save over $300 million annually, alongside potential reductions in overhead costs and enhanced productivity from remaining factories.

Additionally, Cleveland-Cliffs has decided to halt investment in a transformer production facility in Weirton, W.Va., following changes in project scope from its partner that do not align with the company's investment criteria.

CEO Explains the Shift as Core Operations Struggle

In light of recent financials, CEO Lourenco Goncalves stated that the company's first-quarter performance was adversely affected by "non-core assets and the lagging impact of lower index prices projected for late 2024 and early 2025." He emphasized that the newly adopted measures are focused on streamlining operations and boosting overall efficiency.

Cleveland-Cliffs Reports Larger-Than-Expected Loss

In its latest earnings report, Cleveland-Cliffs posted an adjusted net loss of $0.92 per share, surpassing analysts' expectations of a $0.83 loss. However, the company did see a year-over-year revenue increase of 7%, totaling $4.63 billion, slightly above the anticipated $4.62 billion.

As Cleveland-Cliffs navigates these turbulent waters, industry watchers will be keenly observing how these drastic measures impact its future performance.