Alrosa 2008 Profit Slashed 73%, Cuts 2009 Production Plans

Alrosa’s net profit for 2008, including the net profit of OJSC ALROSA-Nyurba, declined to RUB 3.785 billion ($112.88 million), according to a draft annual report. The profit is somewhat above an earlier estimate of RUB 4 billion ($111.66 million) announced by the President of Sakha (Yakutia) Vyacheslav Shtyrov in February.

Profits fell 73.2 percent compared to 2007 when it posted a net profit of RUB 14.133 billion ($598 million).

Alrosa’s consolidated rough diamond production - including production by OJSC ALROSA-Nyurba – was $2.362 billion in 2008 and revenues from core product sales totaled $2.932 billion.

Sales of $2.336 billion by ALROSA Co. Ltd. comprised of $2.179 billion in rough diamond sales and $157.6 million of polished diamond sales. Sales by OJSC ALROSA-Nyurba were $595.7 million.

The harsh economic reality that hit the diamond industry in the fourth quarter of 2008 not only brought a three-quarter cut in Alrosa’s profits, it is also causing the company to revise its targets for 2009.

The executive board of the company proposed to decrease rough diamond production in 2009 to $1.87 billion, expecting diamond sales revenues to further decline to $2.109 billion.

Alrosa is aiming for a net profit of RUB 2.18 billion, indicating that it expects depressed diamond sales this year.