ALROSA Q4 and 12M 2021 operating results

ALROSA Q4 and 12M 2021 operating results

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21 Jan 2022

Moscow, 21 January 2022 – ALROSA, a global leader in diamond production, reports its 2021 diamond production of 32.4 m carats and sales of 45.5 m carats. Proceeds from rough and polished diamond sales totalled $4.2 bn.

Q4 and 12M 2021 trading update:

  • Q4 ore & gravels output declined by 19% qoq to 7.4 mt as a result of the seasonal discontinuation of production at the Mirny Division’s alluvial deposits and lower output at the V.Munskoye deposit due to the shift of the mining focus to stripping. The 33% yoy growth was driven by the launch of production at the Zarya and Zarnitsa pipes. 12M output increased by 12% to 33.5 mt on the Udachny UG mine restart and gradual ramp-up to its design capacity.
  • Q4 ore & gravels processing was down 44% qoq to 6.4 mt due to the seasonal halt in the processing of gravels from the Almazy Anabara alluvial deposits. The 31% yoy growth is explained by the low base effect from 2020 (suspension of processing plants No. 1 of Severalmaz and No. 14 of the Aikhal Division for scheduled preventive maintenance). 12M volumes increased to 30.9 mt (+4%).
  • Q4 diamonds output grew by 4% qoq to 9.1 m ct. The 29% yoy growth was due to ore processing volumes growth (Severalmaz and Aikhal) and a higher grade at the International UG mine. 12M output rose by 8% to 32.4 m ct, primarily due to higher volumes from the V.Munskoye and Nyurba Division deposits.
  • Q4 diamond grade was seasonally up 87% qoq (-1% yoy) to 1.43 cpt following the suspension of production at alluvials. 12M grade increased by 4% to 1.05 cpt as the share of gravel processing at low yielding Almazy Anabara dropped.
  • Q4 diamond sales saw a 3% qoq uptick to 9.4 m ct, incl. 0.5 m ct of diamonds purchased at Gokhran auctions in Q3 2021. The 45% yoy decrease was attributable to the high base effect of Q4 2020 (Q4 2020: 17.0 m ct, incl. 9.9 m ct from inventories) and minimum levels of rough diamond inventories available for sale since mid-2021. 12M diamond sales were up 1.4x to 45.5 m ct, incl. 1.4 m ct purchased at Gokhran auctions and 11.7 m ct from accumulated inventories. Gem-quality diamonds accounted for 67% of total sales (compared to 72% and 69% in 2019 and 2018, respectively).
  • Diamond inventories as at the end of Q4 amounted to 8.8 m ct (+0.2 m ct qoq). Ore and gravels inventories saw a seasonal increase to 11.8 mt (+0.8 mt qoq and +15% yoy).
  • In Q4, revenue per carat of gem-quality diamonds stood at $124/ct, down 9% qoq due to changes in the sales mix, incl. the resale of lower-size rough diamonds purchased at Gokhran auctions. The 36% yoy growth was driven by a 32% yoy increase in the price index. 12M revenue per carat was $128/ct, up 17% yoy on the back of a higher price index and changes in the sales mix.
  • Q4 average price index gained 6% qoq (+32% yoy). In 12M, the price index added 33% (December 2021 vs December 2020), exceeding the level of late 2018 by 6%; the average index change in 2021 was +12.5% yoy.
  • Diamond (rough and polished) sales in Q4 amounted to $895 m (-5% qoq and -27% yoy), incl. $844 m from rough and $51 m from polished diamond sales. The qoq and yoy changes are associated with the high base effect of the previous year, when most sales were made from the inventories, as well as the December trading session shifting towards the end of the month with sales partly moving to January 2022. 12M revenue surged by 49% to $4,169 m, incl. $3,977 m from rough and $192 m from polished diamond sales.

Unit

Q4
2021

Q3
2021

qoq

Q4
2020

yoy

12M
2021

12M
2020

yoy

Ore and gravels output

mt

7.4

9.5

(22%)

5.6

33%

33.5

29.7

13%

Ore and gravels processing

mt

6.4

11.5

(44%)

4.9

30.6%

30.9

29.7

4%

Grade

cpt

1.43

0.76

87%

1.45

(1%)

1.05

1.01

4%

Diamond production

m ct

9.1

8.8

4%

7.1

29%

32.4

30.0

8%

Ore and gravels inventories*

mt

11.8

11.0

7%

10.2

15%

11.8

10.2

15%

Diamond inventories

m ct

8.8

8.6

3%

20.7

(57%)

8.8

20.7

(57%)

Revenue per carat (total)

$/ct

89.7

98.7

(9%)

67.4

33%

87.3

82.7

6%

Revenue per carat(gem-quality diamonds)

$/ct

123.6

136.0

(9%)

91.1

36%

128.3

109.5

17%

Price index**

 

1.10

1.04

6%

0.83

32%

0.90

0.80

13%

Diamond sales, incl.

m ct

9.4

9.2

3%

17.0

(45%)

45.5

32.1

42%

gem-quality diamonds

m ct

6.7

6.5

2%

12.2

(46%)

30.4

23.8

28%

Sales revenue, incl.

$ m

895

938

(5%)

1,222

(27%)

4,169

2,802

49%

rough diamonds

$ m

844

904

(7%)

1,144

(26%)

3,977

2,652

50%

polished diamonds

$ m

51

34

49%

78

(35%)

192

150

28%

* Balance inventories of ore and gravels (excl. off-balance inventories). For details, see Q4&12M 2021 ALROSA Trading Update_EXCEL

** For gem-quality diamonds excl. +10.8ct ones. For quarterly indicators Q1 2017 = 1.00.

Diamond market overview

  • In Q4 2021, consumer sentiment remained high amid the festive season, with preliminary data on US sales suggesting the most profitable Christmas period in the last few years. MasterCard SpendingPulse reports an impressive 32% yoy increase in US jewelry sales for the period from 1 November to 24 December.
  • Strong jewelry sales supported the demand for polished diamonds, whose price strengthened in November–December on the back of stable orders in the US.
  • Demand for rough diamonds outstrips the supply. Following the completion of the Diwali celebration, cutters in India have ramped up production to prepare for jewelry companies' restocking in Q1 2022 on the heels of the Christmas season sales. The decline in diamond supply since mid-2021 due to inventories reaching minimum levels and producers’ limited capacity (mid-term production volumes are estimated at 110–120 m ct vs the pre-pandemic levels of 140–150 m ct) coupled with high jewelry demand is a boon for prices.

Hereinafter, data on Q4 and 12M 2021 production, sales, prices, and inventories is preliminary and may be updated. Data on the diamond market is the Company’s estimate.

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