May 17, 2019

ALROSA Q1 2019 Revenue Grows 15% Over Previous Quarter, Still Down 21% Year-on-Year

ALROSA today reported its IFRS financial results for the quarter ending March 31, 2019 (Q1), stating that revenue increased 15% over the previous quarter to RUB 70 billion, but was still 21% lower than the revenue of RUB 96 billion earned in the comparative quarter a year earlier.

The Company said that sales volumes of 10.6 mn carats too reflected a similar pattern, registering an 18% increase q-o-q, but a 21% decline when compared to the same period of 2018.

EBITDA grew by 16% q-o-q to RUB 31 bn, supported by top line growth, ALROSA said. On a y‑o‑y basis, EBITDA decreased by 34% as revenue declined.

Similarly, net profit grew 3x q-o-q to RUB 24 bn because of, among other things, the low base of the Q4 2018 net profit (due to one-off factors, including impairment) and the growth in EBITDA. A 27% y-o-y decline was attributable to lower revenue.

Alexey Philippovskiy, ALROSA’s Deputy CEO, commented on the results: “Following a sizable destocking of small-size rough diamonds by cutters and polishers in 2H 2018, we saw an improved demand for this product early in 2019. This translated in a 18% q-o-q sales growth in Q1, which came at 10.6 m carats; Q1 revenue increased by 15% q‑o‑q to RUB 70.5 bn. Better operating performance coupled with continuous cost control helped us maintain EBITDA margin at 44%. In absolute terms, EBITDA grew by RUB 4.5 bn to RUB 31.4 bn.”

He added that free cash flow grew to an impressive RUB 25.9 bn (up 81% q-o-q) on the back of capex reduction by 45% q-o-q (-20% y-o-y) to RUB 3.9 bn and RUB 3.6 bn of working capital release, mainly due to a seasonal decline in rough diamond inventories. As a result, the Company’s leverage slimmed down, with the net debt / EBITDA ratio now standing at 0.2x.

Based on the Company’s performance in 2018, the Board recommended ALROSA shareholders to approve 2H 2018 dividends of RUB 4.11 per share, or RUB 30.3 bn in total, which is equal to 100% of the free cash flow.