ALROSA Profits May Decline 2.6 Times in 2014

Moscow: ALROSA, the world’s largest diamond miner by carat, predicts that its profits will decline 2.6 times in 2014 (going down by RUB 21.8 billion) to RUB 13.7 billion versus 2013, mainly due to the weakening of the ruble. This was reported by TASS citing the statement made by Ilya Ryaschin, Acting President of ALROSA during a meeting held in Yakutsk to review the company’s preliminary results in 2014. However, Ilya Ryaschin said that the outlook for 2015 was much more positive.

“This decline is due to the weakening of the ruble,” he said.

According to Ilya Ryaschin, the company built up its market capitalization in the current year by RUB 144 billion driving it to RUB 401.8 billion. “Last year, we floated our shares on the Moscow Stock Exchange at 35 rubles per share and now they are traded nearly at 55 rubles, going up almost 60% since the IPO,” he said. However, he noted that the outlook for 2015 is much more positive.

“The company’s total sales proceeds (at the average exchange rate of 45 rubles per 1 US dollar) will exceed 200 billion rubles, which is 30% higher than in the current year. The net profit is expected to reach 50.7 billion rubles, which is more than three times higher than this year. The numbers, of course, are very good, the company has never demonstrated such performance indicators,” ALROSA’s Acting President noted.

Ilya Ryaschin added that the main task outlined for the next year is to improve financial and economic performance of the company and reduce its loan portfolio to $ 2.3 billion from $ 3.5 billion.

ALROSA is engaged in the exploration, mining and sale of diamonds. The company is mining diamonds in the Republic of Sakha (Yakutia) and Arkhangelsk Region. It is the world’s largest producer of diamonds in terms of volume. In 2013, ALROSA produced 36.9 million carats of diamonds and expects its output to be at a level of 36 million carats in 2014. Starting from 2019, ALROSA plans to produce on average about 41 million carats of diamonds per year. The miner’s capex for 2013-2021 is planned to reach 256 billion rubles. The largest shareholders of ALROSA are the Russian Federation (44%) and the Republic of Sakha (Yakutia) (25%), while its free float is estimated at 23%.