ALROSA Posts $223M Loss in 3Q

Nov 26, 2014 2:20 AM By Avi Krawitz

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RAPAPORT... ALROSA reported a loss of $223 million (RUB 10.3 billion) during the third quarter that ended on September 30, primarily due to foreign exchange losses. ALROSA posted a profit of $180 million (RUB 8.3 billion) the previous year.

Analysts at VTB Capital anticipated the loss, given that an economic slump and Western sanctions imposed in response to the Ukraine crisis have hammered the ruble by 27 percent against the dollar since January.

ALROSA recorded a foreign exchange cost of $429 million (RUB 19.89 billion) during the quarter. But with that impact removed, ALROSA reported operating profit fell only 2 percent year on year to $258 million (RUB 11.93 billion) during the quarter as a result of higher expenses. Revenue rose 8 percent to $909 million (RUB 42.1 billion) with the average price of its gem-quality diamonds down 9 percent from the previous quarter to $182 per carat. The company noted that the average price fell mainly due to a change in its product mix, while market prices rose 3 percent.

VTB Capital also noted that ALROSA's third-quarter was likely to be impacted by a seasonal slowdown, which the mining company already acknowledged in a previous trading update, showing weaker prices and a lower trading volume. VTB Capital expects that the fourth quarter will experience a fairly normal seasonal pick-up in trading volume, potentially leading to stronger prices.

ALROSA previously reported that production fell 2 percent to 9.737 million carats in the third quarter, supported by seasonal growth in output from its alluvial operations.

Production during the first nine months of the year dropped 5 percent to 25.655 million carats, although the company remained on track to meet a target of 36 million carats this year. ALROSA’s revenue increased 21 percent to $3.17 billion (RUB 146.91 billion), while profit fell 44 percent to $276 million (RUB 12.78 billion).

Tags: Alrosa, Avi Krawitz, diamonds, Rapaport