ALROSA, releasing its IFRS financial results for Q3 2019, reported that sales, revenue and profit were all impacted by “the oversupply of polished diamonds” and “challenging situation in India’s financial sector”, but also said that “supply and demand in the diamond pipeline seem to be heading towards balance again”.

The company noted that revenue in Q3 2019 decreased by 20% q-o-q to RUB 46 bn on lower sales volumes (down 23% q-o-q), which was partially offset by higher average realised prices. A 35% y-o-y decline in revenue from RUB 57.4 bn a year earlier, was attributable to lower sales (down 5% y-o-y) and a higher share of small-size diamonds, it added.

Sales of gem quality diamonds dropped 8% y-o-y to 4.3 million carats with the year to date total of 25.3 mn cts being 14% lower than the comparative period a year earlier, ALROSA reported. Rough diamond sales in Q3 2019 decreased by 24% q-o-q to $601 m and by 34% in 9M 2019, the Company said.

Net profit in Q3 2019 remained flat q-o-q at RUB 13 bn, including as a result of other income recognition (release from liabilities under the guarantee to the bank in the amount of RUB 1.5 bn), the company said. It attributed the 44% y-o-y decline in net profit to lower revenue and EBITDA margin (down 11 pp y-o-y).

Alexey Philippovskiy, ALROSA’s CFO, commented on the results: “In 9M 2019, the diamond market was impacted by the oversupply of polished diamonds and challenging situation in India’s financial sector. As major producers have reduced diamond supply by a quarter since the beginning of the year and Indian cutters begin to see stocks gradually winding down, the supply and demand in the diamond pipeline seem to be heading towards balance again. Since early August 2019, the prices and demand have somewhat stabilised resulting in increased monthly sales, with total sales adding 7%, 42% and 2% m-o-m in August, September and October, respectively.

The company also released its 2019 guidance with Production at 38.5 m carats and Sales between 32–33 mn carats.