ALROSA drives its second-quarter net profit to RUB 30.2 billion

ALROSA Group released a statement on its financial results for the second quarter and six months of 2021 saying that in the second quarter the company's net profit went up by 26% QoQ and reached RUB 30.2 billion thanks to the increased profitability of sales. The Group’s net profit for 6 months 2021 amounted to 54.2 billion rubles against 3.3 billion rubles in the same period a year earlier on the back of sales growth.
In the reporting quarter, the company sold 11.4 million carats of diamonds (in the first quarter of 2021 - 15.5 million carats), of which 7.5 million carats of gem-quality (9.7 million carats in the first quarter of this year).
The miner’s revenue in the second quarter increased by 3% QoQ to RUB 94 bn driven by a recovery in like-for-like rough diamond prices (+7%) and a better sales mix. ALROSA’s six-month revenue increased 2.5x to RUB 184 bn, mainly due to a 2.7x growth in sales volumes, the statement said.
The Group’s 2021 outlook for production stands at 31.5 m carats, with a 5% growth potential.
Alexey Philippovskiy, ALROSA’s CFO said: “Q2 saw a continued increase in demand for diamond jewelry, with the US and China (including Hong Kong) growing at an average of 35% and 15% respectively compared to 2019. Heading into the second half of the year, retailers note continued optimism among consumers and their increased interest in diamond jewelry. Buttressed by the stronger demand, there were an increase in diamond sales and a progressive recovery in prices. ALROSA sold 11.4 m ct in Q2 – 38% more than in 2019, and the price index climbed 16% within 6M 2021. Strong operating results translated into further growth of our top line reaching RUB 94 bn and profitability expansion to 49%. EBITDA grew by 36% QoQ to RUB 45.5 bn. The impressive sales growth vs Q2 2020 allowed us to achieve a free cash flow of RUB 12 bn for the quarter and almost RUB 65 bn for the first half of 2021. On the back of the strong free cash flow for 6M, the Company’s net debt as at the end of Q2 stood at minus RUB 30 bn, while ALROSA’s leverage (Net Debt / EBITDA) remained at minus 0.2x. The Company’s strong credit quality, unique business model, and leading position on the diamond market were acknowledged by rating agencies, with Fitch upgrading ALROSA's long-term credit rating to BBB (outlook stable) in June, and S&P in July raising the stand-alone credit profile (SACP) of the Company to above the sovereign (BBB), making us one of the only three companies in Russia with such a rating. The Company’s stable cash flow generation and material leverage improvement resulted in historically high interim dividends for H2 2020 of RUB 70.3 bn, or RUB 9.54 per share. The dividend payout for H1 2021 is to be recommended by the Supervisory Board at the end of August and to be approved by the end of September. Our outlook for the end consumer market remains positive. The market is recovering faster than we predicted. Meanwhile, diamond supply is still 20% below the pre-COVID-19 levels, and the global production is unlikely to bounce back in the midterm.”

Vladimir Malakhov, Rough&Polished