Stirol’s net loss decreases 40% y-o-y in 1Q11

Stirol (UX: STIR UK) posted a net Loss of UAH 112.6 mln, down 40% y-o-y, according to 1Q financial results in a company filing yesterday. The company’s net revenues grew 2.7x y-o-y to UAH 1.14 bln. Stirol generated a negative gross margin of UAH 3.33 mln vs. negative UAH 117.55 mln in 1Q10. Antonina Davydenko: We view this news as positive for the company. The increase in Stirol’s sales stems from higher production volumes and a resumption of ammonia nitrate production, which had been suspended since 2009. The company’s top line also benefited from higher global fertilizer prices (in 1Q11 average FOB Yuzhny ammonia price increased by 40% y-o-y to USD 465 per mt while the urea price rose 25% y-o-y to USD 351 per mt). Stirol’s average sale price for ammonia was USD 373 per mt, which points to a 20% discount to the market price in line with previously announced arrangements to sell to domestic agriculture producers. Meanwhile, ammonia nitrate and urea sales prices were close to market levels.