Alrosa’s sales and earnings declined in the first quarter, reflecting weak demand in the global rough market and constraints from ongoing Russian diamond sanctions.
Revenue fell 42% year on year to RUB 58.13 billion ($709.4 million) for the three months that ended March 31, the Russian diamond miner reported last week. Net profit slid 29% to RUB 14.48 billion ($176.7 million).
Alrosa did not specify a reason for the decline. However, it mentioned challenges due to “ongoing geopolitical tensions, as well as sanctions imposed by a number of countries on certain sectors of the Russian economy,” which “continue to have a negative impact.”
The US and other Western countries have imposed sanctions on Russian diamonds since the country’s war in Ukraine began in February 2022. Russian rough has continued to make its way into certain parts of the market, but Alrosa no longer provides a breakdown of sales by destination.
Last year, Russia’s state owned precious-metal and gem repository helped bail the miner out with the purchase of some of Alrosa’s rough. The miner did not disclose whether it had sold any rough to Gokhran during the first quarter.
The results also came amid a slowdown in overall demand for rough and polished diamonds, following an oversupply in the midstream, weak retail sales in China and competition from synthetics. In March, Alrosa announced it would put mining at several of its smaller deposits on hold to save money during the market downturn.
Sanctions on Russian entities continue to affect the company, “including the cessation of access to the euro and US dollar markets, the international SWIFT system, and many others,” it noted, adding that a number of multinational groups had suspended or paused operations in the country.
Nonetheless, Alrosa believes it is taking “adequate measures to maintain sales volumes of finished products, support sustainable business development and fulfill its obligations in the current circumstances,” it said. “However, an unforeseen further deterioration of the situation in the above areas may negatively affect the company’s results and financial position, [though] it is not possible to determine the extent of such impact at this time,” it observed.
Image: Rough diamonds. (Alrosa)
