Severstal North America’s Q1 2008 financial results have been added to the Nerds of Steel earnings spreadsheet. SNA had EBITDA per ton of $171 in Q1 2008 up from $39 in Q1 2007. However, this result includes a $156 million gain from the buyout of a long term electricity supply contract. Without the one-off gain, EBITDA per ton was ($6). The Q1 2008 results also include SeverCorr, which shipped over 300,000 tons in the most recent quarter.
Severstal recently closed its acquisition of the Sparrow’s Point mill owned by ArcelorMittal. The price paid by Severstal, $810 million, works out to just over $200 per ton of installed steel making capacity. This is well below what assets have been selling for in North America. As can be seen in the graph below, the acquisition cost per ton paid for steel making capacity has risen from around $200 per ton when the consolidation process started, to over $1,000 per ton in the last couple years.
Of course, Sparrows Point was not operating at capacity and generated only $25 million of EBITDA in 2007. So we’ll have to wait and see whether or not this was a good buy by Severstal. On the surface, however, $200 per ton for a fully integrated plant on deep water seems like a bargain.
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