May 16, 2018 / 8:48 AM / 10 months ago

Russian diamond firm Alrosa earnings lifted by higher prices

Polished diamonds are pictured at the polishing affiliate of Russian diamond producer Alrosa in Moscow, Russia February 12, 2018. Picture taken February 12, 2018. REUTERS/Sergei Karpukhin

MOSCOW (Reuters) - Russia’s Alrosa (ALRS.MM), the world’s largest producer of rough diamonds in carat terms, said first-quarter core earnings rose 37 percent as an improved product mix and higher prices offset a drop in sales.

Alrosa said its first-quarter earnings before interest, taxation, depreciation and amortization (EBITDA) reached 48 billion roubles ($771 million), beating an average analysts’ estimate in a Reuters poll of 44.6 billion roubles.

State-controlled Alrosa and Anglo American’s (AAL.L) De Beers produce about half of the world’s rough diamonds. In 2017, Alrosa was hit by a shutdown at its Siberian underground Mir Mine, which had accounted for 9 percent of its annual diamond output before it was partly flooded in August.

In the first quarter of 2018, its diamond production and sales fell on a year-on-year basis. However, its sales grew by 43 percent compared with the last quarter of 2017 to 13.4 million carats as the company sold around 6 million carats from its stockpile.

Its net profit rose 40 percent on a year-on-year basis to 33.2 billion roubles, while net debt fell sharply to 18.6 billion roubles and free cash flow jumped to 41.1 billion roubles.

“Results are stronger than expected and positive for the stock. During the conference call today we will focus on how the company plans to distribute such robust cash flows to the shareholders,” analysts at BCS Global Markets said in a note.

Alrosa also said in its financial report that its subsidiaries had acquired 1 percent of its shares for 7 billion roubles in the first quarter. It did not give any further details.

Shares in Alrosa were up 1.8 percent in Moscow on Wednesday, outperforming the broader market index .IMOEX which was unchanged.

($1 = 62.3225 roubles)

Reporting by Polina Devitt; editing by Maria Kiselyova and Louise Heavens

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