Alrosa Profit Drops in Third Quarter

RAPAPORT… Weak rough-diamond demand led to a decline in profit at Alrosa in the third quarter, the Russian miner reported. 


Profit slid 44% to RUB 13.5 billion ($211.6 million) for the
three months ending September 30, as revenue faltered and the company’s margin fell, it said last
week.


Sales decreased 37% to $611 million, as proceeds from both
rough and polished diamonds declined. Rough sales slipped 37% to $601 million,
while the average price for gem-quality diamonds slid 32% to $135 per carat,
reflecting sales of a higher proportion of small-sized diamonds. Sales volume
dropped 5% to 6.4 million carats.


“The diamond-jewelry demand was affected by increased
macroeconomic uncertainty that put a damper on consumer confidence,” the
company noted. “Amid the declining demand since the beginning of 2019,
diamond-jewelry manufacturers and cutters have been actively reducing their
stocks of end products and rough diamonds.”

Rough output grew 14% year on year to 12.1 million carats
for the quarter, stemming from the launch of production at the Verkhne-Munskoye
deposit, as well as higher production from the Botuobinskaya pipe.



In the first nine months of the year, the miner produced
29.7 million carats, up 12% year on year. Rough sales for the
January-to-September period fell 34% to $2.39 billion.


Alrosa’s sales grew 9% year on year to $264.4 million in
October, as prices and demand continued to stabilize, the miner noted.
Rough-diamond sales increased 9% to $253.9 million for the month, while
polished jumped 17% to $10.4 million.


However, despite the growth in October, weakness in the
market affected the company’s ten-month total. In the first ten months of the
year, sales fell 31% to $2.7 billion. Rough-diamond sales dropped 32% to $2.6
billion, with polished declining 43% to $47.2 million.


Image: Rough diamonds. (Alrosa)