Alexey Philippovskiy, ALROSA's CFO, commented on the results:
"In 9M 2019, the diamond market was impacted by the oversupply of polished diamonds and challenging situation in India's financial sector. As major producers have reduced diamond supply by a quarter since the beginning of the year and Indian cutters begin to see stocks gradually winding down, the supply and demand in the diamond pipeline seem to be heading towards balance again. Since early August 2019, the prices and demand have somewhat stabilised resulting in increased monthly sales, with total sales adding 7%, 42% and 2% m-o-m in August, September and October, respectively.
ALROSA's financials in Q3 2019 saw expected pressure from external factors. Sales went down by 23% q-o-q to 6.4 m carats, and the y-o-y reduction in 9M 2019 amounted to 13% (25.3 m carats). Rough diamond sales in Q3 2019 decreased by 24% q-o-q to $601 m and by 34% in 9M 2019.
Free cash flow in Q3 2019 amounted increased by 4% q-o-q to RUB 2.5 bn, despite the working capital increase of RUB 11.9 bn (up 13% q-o-q) and a minor capex growth (up 2% q-o-q).
Net debt / LTM EBITDA as at the end of Q3 2019 stood at 0.6x, in line with the target leverage and higher than in Q2 2019, which is mainly explained by a 2H 2018 dividend cash payment of RUB 29.8 bn.
In September 2019,the Extraordinary General Meeting of Shareholders resolved to pay 1H 2019 dividends in the amount of RUB 3.84 per share, or RUB 28.3 bn in total, which is equal to 100% of the free cash flow for the period."