Alrosa - April Sales Show No Recovery

Alrosa has reported its April sales results. Revenues from rough diamond sales dropped 14% m-o-m and 20% y-o-y to $315.8 mln. This figure is 23% below the April average for the last three years. Total sales for the first four months of this year came in at $1.3 bln, down 34% y-o-y and 28% below the average for the last three years.The management said that demand for rough diamonds from the midstream in the first four months was weak, as the midstream in India continues to experience difficulties raising financing and also due to the cyclicality of the market. Alrosa now expects the market situation to improve only in 2H19 (although no numbers were provided). When the company commented on its March sales results, it was "cautiously optimistic" about 2Q19. Thus, it appears that Alrosa now sees the onset of this recovery as having been pushed back until 2H19. Because sales again saw no recovery and while a positive outlook remains elusive, we think that the published sales results could be negative for the stock price. Alrosa will publish its 1Q19 IFRS results on Wednesday.