Revenue and Profit Decline for Alrosa

RAPAPORT...Alrosa's revenue and profit fell in 2017, due to a shift to lower-value rough-diamond sales, and a weaker dollar. Revenue for the year declined 14% to $4.68 billion (RUB269.71 billion), while profit slipped 41% to $1.36 billion (RUB 78.62 billion), the miner said last week.The company's diamond sales plunged 16% to $4.31 billion (RUB 248.31 billion).The miner derived its remaining revenue from transportation, gas and socialinfrastructure. Sales to Alrosa's top three regions also decreased, as Belgian revenue fell 12% to $2.19 billion (RUB 125.89 billion), domestic sales inched down 7%to $861 million (RUB 49.60 billion), and India sales slid 21% to $690.3million (RUB 39.77 billion). "Although productionand sales volume increased, Alrosa's 2017 financial results were affected by anumber of...factors, especially the stronger ruble and the product-mix changes,"said Alrosa CEO Sergey Ivanov. The ruble stengthened 5% against the dollar in 2017. Alrosasells diamonds in dollars, but reports results and pays expenses in rubles, meaningthat a stronger ruble in comparison to the dollar leads to lower sales and profit figures. Additionally, the miner saw a 3% rise in its expenses forthe year, "driven by production and sales growth, contribution to the [Diamond Producers Association] andlosses from idle production facilities of the Mir underground mine," itexplained in a statement. Operations at Mir were suspended in August after a flood at the mine claimed eight lives. The company has been making an effort to cut costs, and,despite the rise in expenses, the miner said it was enjoying some success in enhancing efficiency. Alrosa earned $13.5 million at its most recent sale, an auction of rough andpolished stones in Hong Kong. TheRussia-based miner sold 112 special-size stones weighing a combined 1,787 carats. The company also made early repayments of $450 million inbank loans, using money it received from auctioning off its gas assets in February.