ALROSA Q4&12M 2019 IFRS RESULTS MOSCOW, 10 MARCH 2020
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DIAMOND MARKET OVERVIEW Diamond jewelry demand dipped in H1’19 Miners s adjust sted diamon onds s supply Stocks s acros oss s the chain normal aliz ized yoy change, U.S. PCE on jewelry $ bn $ bn 2018 2019 -23% 10.2% -16% YoY 7.9% 15.4 22.9 .9 14.6 6.1% -20% YoY 5.5% 19.3 .3 11.9 4.2% 3.3% 15.6 .6 12.5 .5 0.1% -2.1% Net im Ne imports Net e Ne export xports 2017 2017 2018 2018 2019 2019 Q1'1 '18 Q2'1 '18 Q3'1 '18 Q4'1 '18 Q1'1 '19 Q2'1 '19 Q3'1 '19 Q4'1 '19 (roug (r ugh h dia iamond nds) (poli (p lishe hed d dia iamonds nds) Diamo Diamond produc ucer ers helped he the he India ian mi mid-str stream eam des estoc ocke ked wi with … on on weak eaker er co consu nsumer er co confide nfidenc nce, e, industr ustry to to avo avoid supply ly glut ut, rough diamo iamonds im impor orts down by by ele levat vated stock ocks at at retail, ail, and nd taming price decrease ses finan ancial cial issues es in in India 20 20% yoy Better er off fftake ake in in H2 ’ 19 19 all allowi owing to to bri ring supply and nd deman mand int nto balan ance by by the year-en end Source: Company data and analysis, GJEPC, Bureau of Economic Analysis. 1. Data based on results of ALROSA and other diamond producers with a market share totaling c. 75% in 12M 2019. 3
ALROSA: MANAGING THROUGH THE DOWNTURN Min. allowe owed contra ract ct alloca ocation ion level 2020 output cut down Capex downscale aled m ct RUB bn Initial Revised 80% -4.5 m ct 70% 38.5 38.7 29 34.2 26 22 20 55% 55% 55% 55% Jan Jan'18 Sep'18 Sep Jul'19 Jul' De Dec' c'19 2019 2020 2019 2020 2020 (initial) (initia l) (revis (r ised) Output cut uts at at the he asse as sets with wi A number er of of small small proj ojec ects we were Min ining majors major hel elped industr ustry higher er variabl variable costs, cos s, and with wi reschedule led or or put on on hold destock lo lowe wer pric rices es (~ (~30 30% dis isco coun unt to to No No impac im act on on operati erational nal E.g. AL ALROSA decr ecreas eased min inim imum um Group ave.) allow all owed co cont ntrac ract all allocat catio ion level evel to to perfor orman mance ce … thus us hel helpin ing ma maxi ximi mize ze WC WC rel eleas ease 55% from July 2019 55 and reduce expenditures Source: Company data and analysis. 4
ALROSA ROUGH DIAMOND SALES Q4 diamon ond sale les s went up by 28% qoq (-9% % yoy) Q4 ‘ 19 19 sal ales es up up by by 28 28% qoq qoq (-9% yo yoy) y) to to 8.2 m ct ct, due m ct Gem-quality diamonds Industrial quality diamonds -12% to seasonally higher buying activity (yoy decline driven 38.1 33.4 Share by lower demand and midstream destocking) 13.4 11.7 +28% 9.3 28% Q4 ‘ 19 19 sal ales es in in USD USD incr increased eased by by 48 48% qoq qoq ($888 m) m) 9.0 10.6 9.0 8.3 8.2 3.2 due to 28% qoq sales increase in carats and higher 6.7 6.4 2.7 2.7 72% 3.7 2.3 2.2 26.4 average realized price (see next slide) 24.2 2.0 2.1 10.1 7.9 6.3 6.0 5.9 5.3 4.7 4.3 Q4 ‘ 19 19 sal ales es in in USD USD in increas eased ed by by 8% yo yoy due to higher Q1 '1 '18 Q2 '1 '18 Q3 '1 '18 Q4 '1 '18 Q1 '1 '19 Q2 '1 '19 Q3 '1 '19 Q4 '1 '19 12M ' M '18 12M ' M '19 average realized price (incl. like-for-like impact) and partially offset by lower sales volumes (-9%) Q4 diamon ond sale les s by value e were up by 48% % qoq $ mn Gem-quality diamonds Industrial quality diamonds -26% 12 12M ’ 19 19 sal ales es in in USD USD wer ere down down by by 26 26% to to $3.3 bn bn on lower sales volumes (-12%) and prices (both due to mix 4,412 and like-for-like factors) Share 87 3,273 1,582 26 2% 62 +48% 1,057 988 949 888 4,325 824 796 23 18 98% 1,556 3,211 16 601 11 22 16 1,034 969 933 877 16 802 780 585 Q1 1 '1 '18 Q2 2 '1 '18 Q3 3 '1 '18 Q4 4 '1 '18 Q1 1 '1 '19 Q2 2 '1 '19 Q3 3 '1 '19 Q4 4 '1 '19 12 12M ' '18 18 12 12M ' '19 19 Source: Company data and analysis. 5
INVENTORIES Q4 ALROSA's s diamon ond inventor orie ies s were up 4% % qoq Q4 ‘ 19 19 diamon iamond in invent ntor ories es grew by by 0.9 m ct ct (+4% +32% m ct qoq) to to 22 22.6 m ct ct – though sales accelerated in Q4 +4% (+28% qoq) amid a gradual recovery in diamond demand, but still lagging behind diamond output 22.6 21.7 32 32% yoy yoy grow owth in in in inven entor ories es (+ (+5.6 m ct ct) driven by 18.3 17.5 17.0 15.5 15.9 14.3 12.3 11.7 lower sales (-12% yoy) on 5% growth in output driven by (a) launch of production at the Q3 '1 '17 Q4 '1 '17 Q1 '1 '18 Q2 '1 '18 Q3 '1 '18 Q4 '1 '18 Q1 '1 '19 Q2 '1 '19 Q3 '1 '19 Q4 '1 '19 V .Munskoye deposit in Q4 ’ 18 and (b) productivity improvements at Nyurba ALROSA's s diamon ond inventor orie ies s structure m ct 17.0 21.7 22.6 +4% 6% 11% 1 11% Other 13% 25% 25% Work in progress Finished goods 80% 65% 64% Q4 '1 '18 Q3 '1 '19 Q4 '1 '19 Source: Company data and analysis. 1. Diamond inventories at mining and processing divisions. 6
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