Alrosa Profit Dips Amid Shift to Smaller Stones

RAPAPORT… Alrosa’s profit decreased in the first quarter as its sales mix shifted to lower-value goods.


Net profit fell 27% year on year to RUB 24.1 billion ($371.6 million) for
the period, the miner said last week. Revenue plummeted 27% to RUB 70.49 billion ($1.09 billion), while the average price for
gem-quality diamonds dropped 20% to $123 per carat.


Rough-diamond sales decreased 37% to $988 million, as smaller stones constituted a larger proportion of its sales. Sales volume declined 21% to 10.6 million carats. Alrosa also receives revenue from polished diamonds, transportation, real estate, and other business lines.


“In the first quarter, the diamond market performed weaker
than usual for that part of the year, mainly due to lower jewelry sales during
the Christmas season,” Alrosa said. Sales were higher in the first quarter of 2018, as customers restocked following a long slowdown during which they had limited their purchases, the miner
noted.


Production rose 5% to 7.8 million carats during the quarter, as the miner increased ore processing at its Botuobinskaya pipe and ramped up the
Udachny underground mine. Alrosa also launched operations at the
Verkhne-Munskoye deposit, and achieved higher ore grades at its Severalmaz division, it said.


The company’s inventory increased 16% to 14.3 million carats
as of March 31, compared with a year earlier.


Image: Rough diamonds. (Alrosa)