ALROSA Q1 2020 IFRS RESULTS MOSCOW, 5 JUNE 2020
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ALROSA: COVID response Team Communities Customers Operations Pre revent ntiv ive measur ures taken for ~RUB 400 m allocated to safety Added flexib ibil ility ity to customers Crisis is mana nagement nt committee at-site workers: daily control of measure ures and medical was set up April-June: 100% of purchase the temperature at entrance, equipment, incl. face masks, volumes can be deferred Output re reductio ion n for 2020, provision of masks, etc. testing systems and ventilators scenarios for 2021-22 assessed Laun unch h of a digital l platfo form rm for (both for company and local Shift appro roach for unique large-stone tenders for remote Capex re revised downwards hospitals) specia iali lists to reduce risk of purchase Cost cutting ing measures possible contamination Development of telemedicine (e.g. G&A) networks for the remote areas WFH mode for most of the administrative staff ahead of official quarantine been introduced 3
DIAMOND MARKET OVERVIEW ners 1 adjuste Diam amond nd jewel elry dema mand nd in Q 1’ 20 20 Mine usted diam amond nds s supply Polisher shers s struc uctural turally re reduc uced ed stocks yoy change, U.S. PCE on jewelry $ bn $ bn Q1 2019 Q1 2020 -36% 10.9% -41% YoY 7.3% 7.1% 5.7 4.0 4.4% -29% YoY 3.0% 2.6% 3.3 2.5 3.3 3.2 2.3 (0.6%)(1.3%) (6.1%) Net imp mports Net export orts Q1'18 1'18 Q2'18 '18 Q3'18 '18 Q4'1 '18 Q1'19 1'19 Q2'19 '19 Q3'19 '19 Q4'1 '19 Q1'2 1'20 Q1 1 2019 19 Q4 2019 19 Q1 1 2020 (r (rough diamonds) (p (polished diamonds) Major diamond producers adjusted Better offtake in H2 ’ 19 allowing to After strong start in January supply to stock-building at mid- bring supply and demand into COVID-19 pandemic led to stores stream and price decreases balance by the year-end closure in February-March and stock-piling at retail ~30% of diamond capacity was Mid-stream decreases almost to closed in March-April zero rough purchases on lock- downs/travel restrictions 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. 4
MANAGING THROUGH THE DOWNTURN Resp sponsi nsibility over er custo tomers mers 2020 outp tput ut cut down Capex ex downsc nscale aled Min. allowed contract allocation level m ct RUB bn Initial Revised New 80% 80% - 3-6 m ct In April- June ‘20 up to 100% of min 70% allowed volumes could be deferred 70% 55% 38.5 29 34.2 26 50% 50% 28-31 22 20 ~20 55% 50% 50% 2019 2020 2020 Jan'18 Ja Sep'18 Sep Jul'19 Ju Mar'20 Ju Jun'20 2019 2020 (i (initial) (r (revised) Mining majors helped industry destock by Output cuts at the assets with higher A number of small projects were the end of 2019 and continued to support variable costs, and with lower vs average rescheduled or put on hold in 2020 profitability No impact on operational performance E.g. ALROSA decreased minimum allowed … thus helping reduce cash outlays and 2020 capex outlook was revised contract allocation level to 50% from speed up w/c release once demand downward from RUB 22 bn by March 2020 recovers RUB 1-2 bn … in April - June‘ 20 up to 100% of volumes could be deferred Source: Company data and analysis. 5
ALROSA ROUGH DIAMOND SALES Q1 diam amond nd sales es went t up by 15 15% % qoq (-11 11% yoy) Q1 ’ 20 20: Gem-quality diamonds Industrial quality diamonds m ct -11% sales es up by 15 15% % qoq to 9.4 m m ct ct amid demand o 13.4 +15% recovery in the first half of the quarter. 10.6 Share 3.2 9.4 9.0 9.0 8.3 8.2 6.7 2.7 sales es decli clined by 11% yoy due to sharp drop in 6.4 o 2.4 2.7 25% 3.7 2.3 2.2 consumer activity since the end of February on the 2.0 2.1 10.1 7.9 7.1 75% 6.3 back of COVID-19 pandemic 6.0 5.9 5.3 4.7 4.3 sales ales in in US USD amo amounted ed to to $881 m (down 1% qoq) Q1 1 '18 '18 Q2 '18 '18 Q3 '18 '18 Q4 '18 '18 Q1 1 '19 '19 Q2 '19 '19 Q3 '19 '19 Q4 '19 '19 Q1 1 '2 '20 o with a 15% qoq sales growth in carats due to Q1 diam amond nd sales es by value ue were re down n by 1% qoq (-11 11% yoy) changes in the sales mix (growth in share of small- $ mn Gem-quality diamonds Industrial quality diamonds size diamonds) -11% An An 11 11% yoy reducti uction in in sa sale les in in US USD came as a result of 1,582 o lower sales in carats (down 11% yoy) 26 -1% 1,057 988 949 Share 888 881 824 23 796 18 1,556 16 11 13 2% 601 22 16 1,034 969 933 877 868 98% 16 802 780 585 Q1 1 '18 '18 Q2 '18 '18 Q3 '18 '18 Q4 '18 '18 Q1 1 '19 '19 Q2 '19 '19 Q3 '19 '19 Q4 '19 '19 Q1 1 '2 '20 Source: Company data and analysis. 6
INVENTORIES Q1 ALROS OSA' A's s diamo amond nd inven ento tori ries es were re down n by 6% qoq Q1 ‘ 20 20 diam amond nd invent nventori ries es wer ere down by by 1.5 m ct ct m ct, end of the period +48% (-6% qoq) to to 21 21.1 m ct ct as strong sales exceeding -6% seasonally lower production 48 48% yoy growth th in in invent nventori ries es (+ (+6.8 m ct ct) due to 22.6 both decreased sales and increased output 21.7 21.1 17.0 15.9 15.5 14.3 12.3 11.7 Q1 1 '18 '18 Q2 '18 '18 Q3 '18 '18 Q4 '18 '18 Q1 1 '19 '19 Q2 '19 '19 Q3 '19 '19 Q4 '19 '19 Q1 1 '2 '20 ALROS OSA' A's s diamo amond nd inven ento tori ries es struc ructu ture e m ct, end of the period -6% 14.3 21.1 22.6 1 Other 6% 6% 13% 12% 13% 17% Work in progress Finished goods 82% 80% 70% Q1 1 '19 '19 Q4 '19 '19 Q1 1 '2 '20 Source: Company data and analysis. 1. Diamond inventories at mining and processing divisions. 7
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