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Stronger Ruble Dents Alrosa Results

Sep 4, 2017 4:20 AM   By Rapaport News
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Alrosa’s profit and sales fell in the first half due to lower average rough-diamond prices and a strengthening of the Russian ruble.

Revenue slid 17% to $2.7 billion (RUB 155.55 billion), while profit fell 46% to $847.7 million, the Russian miner reported Thursday. Diamond sales declined 18% to $2.5 billion, with other revenue coming from sales of gas and other products.

First-half sales to Belgium fell 13% to $1.31 billion, while revenue from domestic sales slipped 7% to $419 million. Sales to India dived 25% to $396.1 million.

The slowdown reflected an 18% appreciation of the ruble against the US dollar, the company said. Alrosa reports — and mainly pays its expenses — in rubles, but it sells diamonds in dollars, meaning the strengthening of its home currency has a negative impact on the figures it publishes.

In addition, the average price of diamonds Alrosa sold fell 15% because of a change in the product mix, Alrosa said. The miner accumulated large stocks of smaller rough diamonds at the end of 2016, when India’s November demonetization program dented demand for such goods, the company explained. It sold off these inventories in the first half of this year as demand improved, but the relatively low value of the diamonds drove down the average price.

Still, the average selling price grew 20% in the second quarter compared with the first, Alrosa added.

In the second quarter, which ended June 30, total revenue declined 16% to $1.23 billion, with profit falling 38% to $436.2 million.

Image: Alrosa
Tags: Alrosa, mining, Rapaport News, Rough Diamonds, Russia
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