Russian diamond producer Alrosa reports record profits

Russian miner Alrosa, the world’s largest producer of rough diamonds in carat terms, sees global demand for diamonds rising by up to 2 percent in 2016, it said on Tuesday, after reporting record quarterly profits.

With its main mines situated in Russia’s Far East, the company has benefited from a weakening of the Russian rouble over the past two years, which narrowed its costs in dollar terms, and from a rebound in diamond sales.

Its first-quarter net profit came in at a record high 49.9 billion roubles ($757 million), up from 22.2 billion in the same period a year ago, on revenue up 37 percent at 102.3 billion roubles.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 38 percent to a record 59.3 billion roubles.

The company, which with Anglo American’s unit De Beers produces about half the world’s rough diamonds, said it reduced its 2016 production forecast to 37 million carats from a previous target of up to 39 million carats. It produced 38 million and sold 30 million carats of diamonds in 2015.

The company sold some of its stock of diamonds in the first quarter, reducing its total stockpile by 18 percent to $1.8 billion or 18 million carats, it said during a conference call organised for analysts after the financial results.

Alrosa is due to be privatised later this year along with some other Russian state assets, with the government aiming to earn more than 60 billion roubles from selling a 10.9 percent stake in the company.

The privatisation may happen in 2016 but the timing is yet to be determined, Alrosa said.

Alrosa plans to hold meetings with investors in the United States and Britain in June ahead of the stake sale.

Diamond sales stagnated in 2015, hit by a slowdown in the Chinese economy. However, producers are seeing scope for recovery, especially in the United States, which accounts for 45 percent of demand.

Alrosa rough diamonds