Stakhaniv Wagon decreases net income by 24.7% y-o-y in 1Q11

Stakhaniv Wagon’s (UX: SVGZ UK) net income declined by 24.7% y-o-y to UAH 59.6 mln in 1Q11, while revenues grew by 66.7% y-o-y to UAH 978.2 bln, according to a company press release yesterday. Vitaly Gorovoy: We note the company produced 1,988 freight railcars in 1Q11, up 9% y-o-y. We relate the drop in net margin (6.1% in 1Q11 vs. 13.5% in 1Q10) to expensive casting supplies from VTB Leasing. However, we see improvement in Stakhaniv Wagon’s margins already in 2Q11 as likely, because company reportedly signed an agreement for new casting from Chinese and American suppliers at about a 25-30% discount from average 1Q11 levels.