Alrosa lowered sales & earns more!
Lowered
diamond sales by 8% &
Sales
proceeds increased by 6%
Q4
and 12M 2018 operating results were announced by Alrosa. Alrosa, a global
leader in diamond production, reports diamond production volume in 2018 at 36.7
m carats and sales of 38.1 m carats (down 8%). Sales proceeds increased by 6%
to $4.5 bn.
In
Q4 2018, diamond production decreased by 2% q-o-q remained up 2% y-o-y to 10.3
m carats driven by seasonal suspension of production at alluvial deposits,
which was almost fully offset by increased output at underground mines. In 12M
2018, production declined by 7% to 36.7 m carats due to the shutdown of the Mir
underground mine (UM) and the completion of open-pit mining at the Udachnaya
pipe.
In
Q4 2018, the volume of processed ore and gravels went down 2.3 times q-o-q
registered up 3% y-o-y to 7.5 m tonnes, due to seasonal suspension of
production at alluvial deposits. In 12M 2018, it grew by 3% to 40.5 m tonnes mainly
due to increased gravel processing at Almazy Anabara alluvial deposits (up 8%)
and Mirny Division (up 10%).
In
Q4 2018, the average diamond grade per tonne of ore increased 2.3 times q-o-q
gone down 0.2% y-o-y to 1.38 cpt, mainly due to seasonal suspension of
production at alluvial deposits. In 12M 2018, the average diamond grade was
flat at 0.91 cpt. A 10% y-o-y decrease was mainly driven by the shutdown of the
Mir underground mine in August 2017 and increased production at lower-grade
assets.
Q4
rough diamond sales, excluding polished diamond sales, were 9 m carats &
pushed up to up 34% q-o-q & including 5.3 m carats of gem-quality diamonds
sales hiked up to 12% q-o-q and 3.7 m carats of industrial diamonds registered
growth of up 87% q-o-q.
12M
diamond sales were 38.1 m carats tumbled the graph by 8% y-o-y, including 26.4
m carats of gem-quality diamonds that is down 12% y-o-y and 11.7 m carats of
industrial diamonds is up 5% y-o-y sales chart.
Diamond
inventories at the end of 2018 saw a seasonal increase of 10% q-o-q (down 6%
y-o-y) to 17 m carats. In Q4 2018, average realised prices [1] for gem-quality diamonds fell by 23% q-o-q (up 10%
y-o-y) to $153/ct due to a lower share of large diamonds sales. In 12M 2018,
the average realised prices grew by 21% and reached $164/ct.
The
diamond price index in 12M 2018 gained 3.7% on the back of recovering diamond
demand.
In
value terms, Q4 sales declined by 13% q-o-q to $845 m (down 7% y-o-y), with
diamond sales (ex. polished diamonds) amounting to $824 m. 12M total sales
increased by $241 m (up 6% y-o-y) to $4,507 m. Diamond sales rose by $242 m,
despite lower sales in carats by 8%.
2019
forecast: production outlook is expected at 38 m carats (up 4%).
Market overview:
In
9M 2018, the global diamond jewellery market grew by 5% y-o-y. North America,
the world’s largest diamond jewellery consumer, showed stable sales growth
through the year, up 5% over 9M 2018. In most of the South Eastern Asia,
including India, the diamond jewellery sales growth slowed down, with some
countries showing a decline triggered by devaluation of local currencies
against US dollar.
High
demand in China in early 2018 drove a 7% sales growth in the region in 9M 2018.
The preliminary data on the diamond jewellery sales in China in Q4 2018 shows
further decline.
The
trend of weaker demand for lower priced stones that emerged in Q3 continued
into Q4 2018. Demand for rough diamonds echoed the situation on the polished
diamond market, where uncertified melee diamonds saw the strongest price
decline due to oversupply, weak rupee and lower liquidity in India.
Lower
prices for small-size diamonds coupled with flat personnel expenses decreased
the profitability of melee diamond polishing. Data on Q4 2018 and 12M 2018
production, sales, prices, and inventories is preliminary and may be updated.
Data on the diamond market is the Company’s estimate.
____________
[1]
Average realised prices (sales revenue divided by sales volumes in carat terms)
is also impacted by changes in the product mix throughout the reported period.
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