IFRS Consolidated Statements for Q3 & 9M 2019
MDA Q3 & 9M 2019 Release
MDA Q3 & 9M 2019 Presentation
IFRS Consolidated Statements for Q3 & 9M 2019_EXCEL

Moscow, 8 November 2019 – ALROSA, the world’s leader in diamond mining, announces its IFRS financial results for Q3 2019.

• Revenue in Q3 2019 decreased by 20% q-o-q to RUB 46 bn on lower sales volumes (down 23% q-o-q), which was partially offset by higher average realised prices. A 35% y-o-y decline in revenue is attributable to lower sales (down 5% y-o-y) and a higher share of small-size diamonds.
• EBITDAin Q3 2019 amounted to RUB 21 bn (down 16% q-o-q, down 47% y-o-y) on lower top line.
• EBITDA marginin Q3 2019 increased by 2 pp q-o-q to 46% (down 11% y-o-y).
• Free cash flowin Q3 2019 increased by 4% q-o-q to RUB 2.5 bn reflecting stronger operating cash flow along with a marginal increase in capex (up 2% q-o-q).
• Net profit in Q3 2019 remained flat q-o-q at RUB 13 bn, including as a result of other income recognition (release from liabilities under the guarantee to the bank in the amount of RUB 1.5 bn). A 44% y-o-y decline is attributable to lower revenue and EBITDA margin (down 11 pp y-o-y).
• Net debt / LTM EBITDA¹increased to 0.6x as at the end of Q3 2019 (vs 0.3x as at the end of Q2 2019).
• 2019 guidance:
• Production – 38.5 m carats;
• Sales – 32–33 m carats;
• Capex – RUB 23.0 bn.

Alexey Philippovskiy, ALROSA’s CFO, commented on the results:

“In 9M 2019, the diamond market was impacted by the oversupply of polished diamonds and challenging situation in India’s financial sector. As major producers have reduced diamond supply by a quarter since the beginning of the year and Indian cutters begin to see stocks gradually winding down, the supply and demand in the diamond pipeline seem to be heading towards balance again. Since early August 2019, the prices and demand have somewhat stabilised resulting in increased monthly sales, with total sales adding 7%, 42% and 2% m-o-m in August, September and October, respectively.

ALROSA’s financials in Q3 2019 saw expected pressure from external factors. Sales went down by 23% q-o-q to 6.4 m carats, and the y-o-y reduction in 9M 2019 amounted to 13% (25.3 m carats). Rough diamond sales in Q3 2019 decreased by 24% q-o-q to $601 m and by 34% in 9M 2019.

Free cash flow in Q3 2019 amounted increased by 4% q-o-q to RUB 2.5 bn, despite the working capital increase of RUB 11.9 bn (up 13% q-o-q) and a minor capex growth (up 2% q-o-q).

Net debt / LTM EBITDA as at the end of Q3 2019 stood at 0.6x, in line with the target leverage and higher than in Q2 2019, which is mainly explained by a 2H 2018 dividend cash payment of RUB 29.8 bn.

In September 2019, the Extraordinary General Meeting of Shareholders resolved to pay 1H 2019 dividends in the amount of RUB 3.84 per share, or RUB 28.3 bn in total, which is equal to 100% of the free cash flow for the period.” (please see the press release)

¹LTM EBITDA stands for earnings for the last twelve months before interest, income tax, depreciation and amortisation calculated for the past twelve months in accordance with the International Financial Reporting Standards (IFRS).

²FCF (free cash flow) is the operating cash flow calculated in accordance with the International Financial Reporting Standards (IFRS), net of capital expenditure (posted as Purchase of Property, Plant and Equipment on the consolidated IFRS statement of cash flows).

³Net debt is the amount of debt less cash and cash equivalents and bank deposits at each reporting date in accordance with the IFRS.