Report: Alrosa Sold More Diamonds For Less Money

Alrosa, the state-owned Russian diamond company, has reported its fourth-quarter and full-year 2012 results, revealing that in the last quarter the company tried to lift its revenue by selling more rough at a falling price. Sales revenue in the quarter reached $1.5 billion, up 72% on the September quarter, and up 54% on the same period of 2011.

However, the gain in net income was just 5%, and down 200% compared to the fourth quarter of 2011. The average realized sale price for its gem-quality rough diamonds peaked in the third quarter at $211.30 per carat, according to the Alrosa report. But this dropped 13.3% to $183.20 per carat in the final period. Consequently, both the earnings and profit margins contracted as Alrosa’s management, led by Fyodor Andreyev, sought to boost volume at the mine head and at sales point.

On the year, however, the result was a big jump in unsold diamonds stockpiled by Alrosa. The latest figures show that mine output for 2012 was maintained at 34.4 million carats; in 2011 the total had been 34.6 million carats; in 2010, 34.3 million carats.

The company’s sales, however, came to 33.2 million carats, forcing the company to expand its inventory by 1.2 million carats. In 2011, sales were 32.9 million carats; in 2010, 39.5 million carats. The average sale price over the year was $193.80 per carat; that was a retreat on 2011 of just 2%.

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