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Alrosa Expects Demand to Return by August

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20-06-08

(From:Rapaport News)

 

 

 

 

Alrosa believes rough-diamond demand could rebound by July or August, as the impact of the Covid-19 pandemic eases in some regions.

“Today, we see diamond-jewelry sales bouncing back in China and other Asian markets, which is expected to drive diamond demand up as soon as July to August,” Alrosa chief financial officer Alexey Philippovskiy said last week.

However, the Russian miner still believes the coronavirus could adversely affect its performance in the second-quarter and beyond, depending on how long pandemic-related restrictions last, it noted.

Net profit for the first quarter ending March 31 slid 87% year on year to RUB 3.1 billion ($45.1 million) due to the revaluation of its foreign-currency debt. Revenue fell 11% to RUB 62.7 billion ($912.6 million), while the average price for gem-quality diamonds was flat at $123 per carat.

Rough-diamond sales dropped 11% to $904 million, with sales volume falling 11% to 9.4 million carats as the virus continued to spread. Alrosa receives additional revenue from polished diamonds, transportation, real estate and other business lines.

“After mid-February, the demand and customer activity declined amid the uncertainty surrounding the Covid-19 pandemic,” Philippovskiy added. “In March, the situation escalated, with sales dropping considerably as the restrictions were being introduced around the world.”

Production rose 2% to 8 million carats during the quarter, as the miner increased ore processing at its Aikhal and Udachnaya underground mines.

The company plans to decrease output at its Severalmaz deposit for the year to avoid adding to its inventory given the current closure of key buying markets and the slump in demand, it said. Alrosa previously suspended mining operations at the site on May 12, and expects to resume on November 1. While the miner shut down ore processing on May 16, it plans to restart for three months beginning July 1, and will then suspend it again until the end of the year. Output at Severalmaz came to 1 million carats in the first quarter, accounting for 13% of the company’s total production.

The company’s inventory increased 48% to 21.1 million carats as of March 31, compared with a year earlier.

 

 

 

 

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