Announcing its financial results for the second quarter and first half of 2020 under IFRS, ALROSA informed its shareholders that there would be no interim dividend payments for the first half of the year.
“As regards dividends for H1 2020, taking into account the negative free cash flow amounting to RUB 8.3 bn, there are no conditions for interim dividend payment, according to the dividend policy,” said Alexey Philippovskiy, ALROSA’s CFO in a commentary to the company’s financial results.
In Q2, the company’s revenue decreased by 83% q-o-q (down 82% y-o-y) to RUB 10.4 bn, due to lower sales in carats which shrunk 93% q-o-q (down 92% y-o-y), ALROSA said in a statement distributed on Friday, August 14. EBITDA1 in Q2 slipped to RUB 0.1 bn (down 100% q-o-q and y-o-y) on the back of a substantial sales drop which was partially offset by optimisation initiatives. Net profit in Q2 stood at RUB 0.3 bn (down by RUB 2.8 bn q-o-q and RUB 13.2 bn y-o-y), which also reflected the significant drop in revenue. Free Cash Flow (FCF) in Q2 slided to minus RUB 30 bn on the back of the decline in operating cash flow to minus RUB 25.6 bn (down RUB 50 bn q-o-q and RUB 33 bn y-o-y). ALROSA’s outlook for diamond output in 2020 stands at 28-31 million carats.
In his commentary, Alexey Philippovskiy pointed to the signs of recovery in the diamond market. “In June, demand for jewelry in the US rose 1.9% y-o-y, and the consumer activity in China increased,” he said. “We are also seeing the first signs of growth in diamond imports to India as exports of polished diamonds recover. For now, this growth has been met via domestic stocks of cutters, but we estimate that the cutters’ purchasing activity will start to recover in September in anticipation of the seasonal growth of demand for polished diamonds in November–January. Obviously, if this scenario materialises, the demand will still be “cautious” anyway. Besides, we cannot rule out the possibility of the “second wave” of the virus, which may become a game changer.”
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