Fitch, a global credit rating agency, upgraded ALROSA's Issuer Default Rating (IDR) from BB+ to BBB-, with a stable outlook. The agency highlighted the company's leadership in the global diamond market, stronger financial position and higher transparency. Fitch is the third international rating agency to upgrade ALROSA's rating to investment grade: over the recent 12 months, Moody's S&P Global Ratings took a similar stance.
According to the agency, the upgrade reflects ALROSA's increased financial flexibility and clarity regarding its future dividend payments and positive free cash flow (FCF). The agency also noted that the company's management team is considering investment grade criteria. ALROSA's rating is also supported by its leadership in the global diamond market, including low cost position, as well as by moderate capital expenditures.
In 2018, ALROSA's revenue under IFRS grew by 9% to RUB 300 bn. EBITDA increased by 23% to RUB 156 bn, and EBITDA margin expanded by 6 p.p. to 52%. Free cash flow went up by 26% to RUB 92 bn, and net profit grew by 15% to RUB 90 bn. Net debt to EBITDA declined from 0.7x to 0.4x.
"Our company demonstrated strong 2018 financial performance driven by well-run operations, flexible and efficient sales management, and operational improvements program. We see a gradual market recovery in the coming months, following a slowdown in the end of 2018 and early 2019. ALROSA generates a stable cash flow allocating substantial amounts to maintain its financial stability. - said Sergey Ivanov, CEO. - We are pleased analysts of rating agencies, investors and experts recognize our efforts. Currently, ALROSA has investment grade ratings from the three major international rating agencies".
