Alrosa 3Q revenue increased by 9% y-o-y!
Alrosa, a global leader in diamond mining, announces its IFRS results for Q3 and 9M 2020 & that says, in by 5x q-o-q to RUB 49.7 bn which is up by 9% y-o-y, due to demand recovery following a significant drop in diamond supply in Q2 amid the pandemic. EBITDA in Q3 reached RUB 25.7 bn over the Q2’2020 of RUB 117 m, on the back of sales rebound and cost control initiatives, while also increasing by 22% compared to Q3 2019. EBITDA margin in Q3 expanded to 52% which was recorded of 46% in Q3’2019.
“From mid-August we started to see the first signs of recovery in the diamond market followed by a stronger demand for our core products. This was due to two key factors. The first one is the maximum support for our long-term customers by allowing them to refrain from buying volumes under effective contracts, which helped them significantly reduce stocks at the midstream.
The second one is recovery of end demand for jewelry as the key markets saw the restrictions lifted (in September demand in China and US grew 13% and 14% y-o-y, respectively) supported by fast-growing online sales.
However, it is definitely too early to speak of the full recovery. The markets still face uncertainty caused by the pandemic's impact on the global economy and subsequent developments. The key indicator for the diamond industry will be upcoming Christmas and Chinese New Year retail sales.
As part of the ongoing efforts to fend off Covid-19 and its impact, the Company continues to take all steps needed to ensure the safety of its people. These include maintaining remote work arrangements for the majority of the administrative staff, providing the personnel with PPE, mandatory two-week observation, three tests prior to the shift start, and many more.
From the operational viewpoint, we remain focused on boosting efficiency and reducing costs across the lines, while staying flexible when it comes to planning capacity utilisation rates. Given the accumulated stocks and sales expectations for certain diamond categories, the Company's Board was recommended to approve as the base case scenario 2021 production guidance of 28–30 m ct mainly underpinned by production cuts at Almazy Anabara and Severalmaz.
The demand recovery undoubtedly had a positive impact on Alrosa's Q3 financial results. Our revenue grew 5x q-o-q to RUB 49.7 bn; while EBITDA rose to RUB 26 bn and EBITDA margin reached 52%. Free cash flow increased to RUB 23 bn. With a Q3 positive cash flow supporting our strong liquidity position at $1.7 bn, on 3 November we fully repaid $494 m Eurobonds as planned. As a result, we reduced our total debt to $2.3 bn to date.”