WOOD Flash – Alrosa: 4Q19 financial results – better-than-expected 4Q19 FCF, but weaker guidance
This morning (10 March), Alrosa announced its 4Q19 financial results, with the 4Q19 EBITDA and FCF 2% and 34% above our forecasts, respectively, which we see as a positive. At the analyst meeting following the results, management said that it does not expect a further decline in the like-for-like prices and forecasts a USD 5-10/ct improvement in realised prices due to the mix effect in 2020E. However, on the negative side, management announced higher capex forecasts than previously (by RUB 10bn in 2020-24E, due to deferred spending from 2019) and now expects lower sales volumes than guided previously, which should result in a negative share price reaction, in our view.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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