Alrosa's Note of Optimism Despite Slump in Revenue and Profit
March 10, 20
(IDEX Online) - Alrosa, Russia's leading diamond miner, today blamed weak demand for a 21 per cent drop in revenue and a 31 per cent slump in net profit for 2019.
It released financial results days after announcing it would cut supply to match the falling demand due to the coronavirus epidemic.
Sales were down 12 per cent because of "weaker demand in the rough and polished diamonds market," Alrosa said in financial results for Q4 2019 and FY 2019, as overall prices fell by six per cent.
But CEO Alexey Philippovskiy sounded an optimistic note for the coming year, in spite of the coronavirus outbreak and other exogenous factors.
He said: "The diamond industry looks much healthier in 2020, with balanced stocks, both for jewellery in retail, and for cutters' diamonds, and with the mid-stream leverage back to historical levels."
Diamond sales for 2019 totalled 33.4m carats, down from 38.1m for 2018. The company expects to produce 34.2 m carats this year.
Revenue in 12M 2019 was down to RUB 238 bn ($3.3bn) and EBITDA was down to RUB 107 bn ($1.49bn).
Mr Philippovskiy said the overall weakening of demand for diamonds in 2019 caused the diamond price index to go down by 6% vs 2018. 2019 was marked by stronger demand for small-size diamonds, reflected in a 16% reduction in average realized prices.