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ALROSA Profit Spikes on Diamond Market Recovery
Mar 16, 2017 5:12 AM
By Rapaport News
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RAPAPORT... ALROSA’s profit quadrupled in 2016 as rough diamond demand improved and the Russian ruble recovered against the dollar.
“They were pretty solid results and in line with our expectations,” said Dmitry Glushakov, an analyst at VTB Capital Research. “There were no real surprises.”
Net profit jumped to $2.3 billion (RUB 133.47 billion) from $554.2 million (RUB 32.2 billion) the previous year, the miner reported Thursday. Revenue grew 41 percent to $5.46 billion (RUB 317.09 billion).
The miner’s bottom line got a boost from a $553.2 million (RUB 32.14 billion) gain on foreign exchange, compared to a loss of $841.1 million (RUB 48.86 billion) the previous year, after the ruble recovered some of its losses against the dollar.
“2016 was a year of active recovery in the diamond market following the decline of 2015,” said Igor Kulichik, ALROSA’s chief financial officer. “The company managed to deliver record-high financial performance and generate net cash flow sufficient to repay short-term and medium-term liabilities and pay out dividends to shareholders.”
ALROSA shares rose 3 percent following the results’ announcement in morning trading on the Moscow Securities Exchange. The shares have fallen 9 percent since the beginning of the year, amid rumors of a management change culminating in Sergey Ivanov being confirmed as the new chief executive officer earlier this week.
Glushakov acknowledged that changes in management always represent some risk for the company, but added that previous changes had not impacted ALROSA’s operations.
Ivanov, speaking later in the day during ALROSA’s earnings conference call, said he would continue to implement the company’s strategic plan to grow production above 40 million carats, reduce costs and dispose of non-core assets, among other goals.
Meanwhile, other market-related risks have diminished since diamond demand gained some momentum in the first quarter, Glushakov said. ALROSA’s diamond sales reached $767.3 million in the first two months of the year, with the mining company noting stable demand in most categories of rough diamonds.
ALROSA is planning to raise production 6 percent to 39.2 million carats in 2017, after selling 40.1 million carats in 2016. Group production fell 2 percent to 37.4 million carats last year as it reduced inventory built up during the 2015 market slump.
The company cut down that inventory by 3 million carats, ending the year with 19 million carats valued at $1.8 billion, Kulichik said in the conference call.
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Tags:
Alrosa, mining, Rapaport News, Rough Diamonds, rough sales
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