Appendix – Excel
Moscow, 16 July 2020 – ALROSA, a global leader in diamond production, reports its Q2 2020 reduced diamond production of 5.7 m carats and sales of 0.6 m carats. 6M 2020 diamond production declined to 13.7 m carats, and sales amounted to 10.1 m carats.
- Due to the economic crisis on the key markets caused by COVID-19, in Q2 ALROSA implemented measures to optimise production by reducing plan for 2020 to 28-31 m cts and to balance supply and demand through a flexible sales strategy – selling diamonds only if there is real demand and allowing customers to defer contract volumes to subsequent periods (for more details, see the press release dated 29 May here). These factors were the key drivers behind Q2 and 1H 2020 operating results.
- Diamond production in Q2 decreased 29% q-o-q (down 42% y-o-y) to 5.7 m cts. 6M production declined 22% to 13.7 m cts.
- Q2 ore and gravels processing seasonally grew 24% q-o-q to 7.4 mt mainly due to resumed production at alluvial deposits. The indicator declined 30% compared to Q2 2019. The total for 6M number came in at 13.3 mt (-21%).
- Q2 average diamond grade went down 43% q-o-q to 0.77 cpt due to the seasonal increase in the share of lower-grade ore produced at alluvial deposits. 6M average diamond grade remained virtually flat at 1.03 cpt.
- Sales: as a result of ALROSA’s decision to offer flexible terms, Q2 diamond sales decreased to 634,000 cts, including 361,000 cts of gem-quality diamonds. 6M sales declined 47% to 10.1 m cts.
- Diamond inventories as at the end of Q2 increased 25% q-o-q to 26.3 m cts.
- Q2 average realised price for gem-quality diamonds increased to $200/ct (up 63% q-o-q and 54% y-o-y) amid stronger demand for large-size diamonds in the sales mix. The same indicator for 6M came in at $127/ct (up 1%).
- Q2 diamond price index was just 1.4% q-o-q lower as the Company continued to implement its “price-over-volume” strategy. YTD the index was down 2%.
- Proceeds from rough and polished diamond sales in Q2 came in at $87 m (down 90% q-o-q and 89% y-o-y), including $74 m from rough diamond sales and $13 m in revenue from polished diamond sales. Sales for 6M were $991 m.
Diamond market overview
- Most mining companies halted diamond production due to the pandemic and subsequent lockdowns between March and April/May, and several deposits remain closed pending the recovery of market activity. In the face of uncertainty, some companies withdrew their 2020 production plans, while others lowered their forecasts by 7–22%.
- The global diamond industry began to stir in May–June, when the global diamond exchanges resumed activities in strict compliance with the restrictions caused by COVID-19. The cutting centre in Surat, India, resumed limited operations in late May, but was suspended again in July to contain the spread of the disease.
- Retail markets of China followed by the US began to show promising signs of recovery. China coped with the pandemic ahead of other countries, which accelerated the recovery of demand for diamond jewellery in the country. Major jewellery retailers in China reported higher than expected May sales. In May–June, jewellery stores began to reopen in other countries and regions, primarily in the United States, EU, Japan and South Korea. At the end of Q2, the recovery of the US market was negatively affected by protests.
- On the back of weak demand, ALROSA remains committed to its “price-over-volume” policy and satisfies only the real demand while maintaining a stable price. The policy is aimed at supporting long-term customers and the entire diamond industry.
Data on Q2 and 6M 2020 production, sales, prices, and inventories is preliminary and may be updated. Data on the diamond market is the Company’s estimate.