WOOD Flash – Alrosa: 1Q20 trading update – no surprises
Alrosa reported its 1Q20 trading update today (16 April). Total rough and polished diamond revenue had been reported already, at USD 904m, down 1% qoq and 10% yoy, so this comes as no surprise. The yoy revenue fell, broadly in line with the 11% yoy drop in sales volumes, so prices were broadly flat yoy. However, sales volumes rose 15% qoq, offset by a 14% fall in average prices qoq, as a weaker mix prevented qoq revenue growth (Alrosa’s price index declined only 1.2% qoq). There were no surprises on the production side, at 8.0mcts, up 2% yoy, but down 9% qoq, in line with the seasonal norms, as lower alluvial production occurs in the Russian winter months. Production guidance is unchanged, at 34.2mcts, while the company is now giving no sales forecast, saying “sales volumes will depend on the COVID-19 epidemiological situation and respective measures taken globallyâ€, which should not come as a surprise to the market either. We see the results as neutral for the share price.AK Alrosa PAO. AK Alrosa PAO (Aktsionernaya kompaniya ALROSA PAO or ALROSA Company PJSC), formerly AK Alrosa OAO, is a Russia-based company which is principally engaged in the exploration, mining, manufacture and sales of diamonds. Its operations include five Integrated Mining and Processing Complexes: Mirny, Udachny, Aikhal, Anabar and Nyurba located in the Sakha Republic; sorting divisions and diamond cutting and polishing division. The Company is a member of variable diamonds associations. It operates through several representative offices, branches and subsidiaries, including Alrosa-Nyurba OAO, Almazy Anabara OAO and Severalmaz OAO.
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