Since August-September 2011, when crisis phenomena started to manifest in the diamond market, ALROSA reduced its prices for diamonds by 4%, the company’s President Fyodor Andreyev said in an interview to the Russia 24 TV Channel.
He noted that despite a decrease in the company’s total revenues and its underperformance in sales ALROSA managed to reach its planned targets for profits and efficiency. Andreev also stressed that ALROSA, notwithstanding the decline in demand for diamonds, could fulfill the annual plan for sales.
This year, due to the positive dynamics in diamond prices the company raised its revenue target on two occasions, but the downturn in market demand made it decrease its plan. Initially, ALROSA intended to drive its sales to $3.5 billion in the current year. In mid-June the diamond miner’s forecast was raised to $4.7 billion, and in late September, the Supervisory Board of ALROSA approved a consolidated budget for 2011, according to which the company’s revenue was to reach $5.015 billion. In mid-November, Andreev said that this objective could be reduced to $4.5 billion, and in mid-December, the Executive Board of ALROSA adjusted its forecast to $4.8 billion. The current revenue forecast is $ 4.45 billion.
Speaking about the prospects for an IPO, Andreev said that the government is still debating about the way (IPO/SPO) and timing. "For ourselves, we set the task to float our stock by the end of 2012 on a Russian trading floor," Andreev said.
According to him, ALROSA’s own offer to the Russian Federation and Yakutia is to sell 7% of their stock each, which "will leave 76% in the hands of the state after the IPO before the plans to complete privatization and exclude the state from the list of shareholders."
Previously it was reported that ALROSA may carry out an IPO and then an SPO for its shares and its management pointed to MICEX as the most likely place to float the stock.
Last summer, the Russian Ministry of Finance submitted to the government a proposal to sell more than 40% of ALROSA within a three-year privatization program (according to which the Russian Federation was to sell 25.92% and Yakutia 7% of their stakes in ALROSA) leaving the controlling stake in the hands of the Russian Federation, Yakutia, and uluses (local municipalities). In August, First Vice Prime Minister Igor Shuvalov introduced even more radical proposals to the President envisaging a possibility for the Russian Federation to withdraw completely from the charter capital of ALROSA by 2017. In this case, the Russian Federation could be left with a "golden share" in the company (giving the right of a blocking vote) and invest the released capital into the infrastructure of Yakutia.
ALROSA is the world's largest producer of diamonds by carat. The Russian Federation represented by the Federal Property Agency owns 50.92% of ALROSA shares, the Ministry of Property Relations of Yakutia 32%, and 8 Yakut uluses (local municipalities) have 8% together. The remaining 9.07% of shares belong to individuals and legal entities (including 0.2% owned by the company’s subsidiaries). The Vostok Nafta Investment Fund and KIT Finance Bank are among the minority shareholders. According to media reports, Suleiman Kerimov is also a shareholder of ALROSA possessing a one-percent stake in the company.
Finmarket
