Alrosa Slashes Full-Year Sales Outlook

RAPAPORT... Alrosa has reduced its sales forecast for this year in light of sluggish rough demand in the second quarter.The company expects to sell between 32 million and 33 million carats of rough diamonds for 2019, compared to its previous plan of 38 million carats, it said Monday."The diamond market continued to be affected by a number of negative factors [in the second quarter] that had first emerged as early as the second half of the previous year," said Alrosa deputy CEO Alexey Philippovskiy. These included sluggish jewelry retail sales, excess inventory in the midstream and retail sectors, and Indian manufacturers' difficulties obtaining credit, he added.Revenue dropped 21% year on year to RUB 57.4 billion ($858.5 million) for the three months due to weaker prices on a like-for-like basis, a well as a shift to lower-value goods, the company explained. Rough-diamond sales volume slipped 8% to 8.3 million carats, with revenue from gem-quality stones declining 5%. The average price of gem-quality rough slid 21% to $130 per carat. Profit fell 47% to RUB 13.4 billion ($200.4 million) due to the lower revenue and smaller margins.Revenue in the first half of the year plunged 24% to RUB 127.9 billion ($1.91 billion), while profit plummeted 36% to RUB 37.5 billion ($560.9 million).The miner's inventory grew 36% year on year to 15.9 million carats at the end of the second quarter, as output of 9.7 million carats exceeded sales. Still, the miner increased its production outlook for the year to 38.5 million carats, compared with its previous prediction of 38 million carats, despite the oversupply in the market. The rise is due to "efficiency gains," the company noted.Alrosa expects demand to rebound toward the end of the third quarter, as retailers stock up for theholiday season, it added. Image: Rough diamonds. (Alrosa)