Moscow — Russian diamond miner Alrosa, the world’s largest producer of rough diamonds in carat terms, reported a 55% drop in first-quarter net profit on Thursday, blaming a stronger rouble.
State-controlled Alrosa and Anglo American’s De Beers unit produce about half of the world’s rough diamonds.
Alrosa announced a first-quarter net profit of 22.7-billion roubles ($404m) as earnings before interest, taxation, depreciation and amortisation (Ebitda) fell 41% from a year earlier to 35.2-billion roubles.
Revenue declined 17% from a year earlier to 84.8-billion roubles.
"Rouble appreciation against the US dollar, and a change in the product mix resulted in a decrease of gem-quality rough diamond sales year-on-year," Alrosa said.
Revenue has begun to improve, rising 38% in January to March from the previous quarter as Indian demand for rough diamonds recovered.
Alrosa has previously said it increased diamond production by 9% in the first quarter from a year earlier to 8.9-million carats, while diamond sales were well above production and reached 14.1-million carats for the period.
The high sales mean Alrosa’s inventory was reduced by 5.2-million carats to about 13-million carats and is now closer to Alrosa’s long-term target of 10-million carats.
Analysts at VTB Capital said in a note on Thursday Alrosa’s Ebitda missed their expectations due to the accounting treatment of inventories but a free cash flow of 35-billion roubles exceeded their estimates by 17%. VTB Capital said a recovery in diamond prices might enable Alrosa to report comparable earnings in the second quarter despite seasonally lower sales volumes and a stronger rouble.
Alrosa’s share price in Moscow was down 2.6% on Thursday, underperforming a 0.2% decline in the Micex index. — Reuters
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