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In 2019, ALROSA's financial results continue to decline

08 november 2019

alrosa_logo.jpgALROSA, the world leader in diamond mining, reported its IFRS financial results for Q3 2019.
The company's revenue for the 3rd quarter decreased by 20% compared with the previous quarter, to 46 billion rubles from 57.4 billion rubles due to a 23% decrease in sales volumes compared to the previous quarter, which was partially offset by an increase in average selling prices.
A 35% decrease in revenue y-o-y is associated with a 5% decrease in sales volumes compared to the previous year and an increase in the share of small stones.
The miner's EBITDA amounted to 21 billion rubles, having decreased by 16% compared to the previous quarter and by 47% compared to the previous year amid a decrease in revenue, while the EBITDA margin increased by 2 percentage points compared with the second quarter and amounted to 46%. However, such a result indicates a year-on-year decrease of 11% pp. Free cash flow grew by 4%, to 2.5 billion rubles, against 2.4 billion rubles during the previous quarter.
The company's net profit remained flat and amounted to 13 billion rubles.
However, on an annual basis its net profit decreased by 44%. The company's net debt grew to 0.6x (Q2 2019 - 0.3x).
In 9 months of 2019, the company's sales decreased by 13% compared to the same period in 2018, to 25.3 million carats. ALROSA revenue for the same period fell by 27%, to 173.6 billion rubles from 283.3 billion rubles. EBITDA also fell by 40%, to 77.5 billion rubles from 129.1 billion rubles.
In addition, ALROSA reported that in October this year it sold $264.4 million worth of diamond products, which shows a slight increase of 2.16% compared to the previous month when $ 258.7 million worth of diamond products was sold.
Sales of rough diamonds in value terms amounted to $ 253.9 million, polished diamonds - $ 10.4 million, while in September the company sold significantly less polished diamond products - only for  $ 2.2 million, and rough diamond sales amounted to $ 256.5 million.
In total, in January-October 2019, ALROSA sold rough diamonds worth $ 2,686.6 million. The value of rough sold for ten months of 2019 amounted to $ 2,639.4 million, polished diamonds - $ 47.2 million, while last year over 10 months, the company sold $ 3.905 billion worth of diamonds, $ 3.822 billion worth of rough diamonds and $ 83.0 million worth of polished diamonds, which exceeds the current year results.
Evgeny Agureev, Deputy CEO of ALROSA noted that in 2019 the diamond market was influenced by an oversupply of diamonds, as well as the difficult situation in the financial sector in India.
However, "a gradual decrease in the level of surplus stocks among cutters in India indicates a gradual restoration of the supply and demand balance in the diamond pipeline," he added.
In 2019, ALROSA intends to produce 38.5 million carats of diamonds and sell 32-33 million carats of diamond goods.

Victoria Quiri, Correspondent of the European Bureau, Rough&Polished, Strasbourg