Alrosa records consistent sales in initial results declared after more than a year

The Russian diamond company had a modest increase in revenue during the first half of 2023, despite being given permission to withhold important information about the final destinations of the diamonds it sold

Russian diamond company Alrosa’s first financial statement since March 2022, when it ceased reporting due to the disruption caused by the conflict in Ukraine that disconnected the company from much of the global diamond industry, has been published. The invasion in February 2022 prompted sanctions on Russian diamonds by Western nations, which remain in effect.

In the report released recently, the company noted a slight increase in sales, amounting to RUB 188.16 billion ($1.9 billion), during the six-month period, compared to RUB 187.88 billion ($1.9 billion) from the previous year. However, profit experienced a decline of 35%, amounting to RUB 55.57 billion ($562.5 million).

This year’s first-half revenue also exceeded the RUB 181.76 billion ($1.84 billion) reported by Alrosa for the same period in 2021, prior to the imposition of sanctions.

Moving to the second quarter of 2023, the company reported an 8% year-on-year revenue growth, reaching RUB 92.51 billion ($936.5 million). Nevertheless, profit declined by 25%, totaling RUB 27.07 billion ($274 million).

Notably, the usual segmented revenue sections were omitted in this report. This omission was explained by a government decree on July 4, 2023, which authorized listed companies to limit information disclosure if it could potentially lead to restrictive actions from foreign nations.

The omitted information encompasses the breakdown of overseas and domestic sales and customer location-based revenue details, which typically highlight major buyers like Belgium, the United Arab Emirates (UAE), and India.

Since the implementation of sanctions, the destination of the majority of Russian rough diamonds has remained ambiguous. Past speculations have mentioned Antwerp, Dubai, and Surat as potential markets.

While the US enforced a ban on direct imports of Russian diamonds and imposed sanctions on Alrosa, other significant markets like the European Union (EU), India, China, and the UAE did not follow suit. Additionally, polished diamonds originating from Russian rough but manufactured elsewhere are technically considered legal in the US under the concept of “substantial transformation”.

Data from India’s Gem & Jewellery Export Promotion Council (GJEPC) website indicated a 46% year-on-year increase in India’s imports of rough diamonds from Russia, totaling $1.2 billion, in the 12-month period ending on March 31, 2023. In the preceding fiscal year, imports surged by 15% to $818 million.

Courtesy: diamondworld.net