Russian diamond major Alrosa saw its diamond sales plunge 90% month on month and 95% year on year to $15.6mn in April.
"Alrosa virtually stopped selling rough and polished diamonds as governments across the globe were taking active steps to prevent the spread of the coronavirus, while Alrosa remained committed to its price over volume strategy," BCS Global Markets commented on May 13 citing the company.
As reported by bne IntelliNews, at the end of 2019 Alrosa's sales rebounded after a difficult year, but the outlook was worsened by the coronavirus (COVID-19) pandemic as the company posted 60% drop in sales in March.
But despite the market difficulties that have already forced Alrosa to shut down two lower-margin stone mines, the diamond miner has tried to maintain solid investment appeal and recommended paying dividends of RUB2.63 per share for 2H19. This brought the total payout for 2019 to 100% of free cash flow, double that of the minimum payout of 50% of FCF.
Previosuly in 2019 when Alrosa's sales suffered, the company also counterbalanced it with an effort to improve its investment case and pledged to pay dividends for 2H19 even if cash flow turned negative.
In April the CEO of Russian diamond major Alrosa, Sergei Ivanov, supported the image of the company by selling half of his stake in order to support the Republic of Yakutia, where most of the company's operations are located, to fight the epidemic of the coronavirus (COVID-19)
Now Alrosa expects to see an upward trend in demand for diamonds as early as in the beginning of 3Q20.
"Weak diamond sales results by Alrosa in April was expected, as the diamond trade was practically paralysed during the month," BCS Global Markets commented on May 13, also expecting the diamond demand and company’s sales to start recovering in 3Q20.
BCS GM analysts have maintained a Buy recommendation on the name, the same as the recent Russian equity market report by Renaissance Capital, which predicts Alrosa to be one of the V-shaped recovery stocks.
The Federal State Property Management Agency owns 33.02% of Alrosa, the Republic of Yakutia has 25% plus one share, regions of Yakutia where the company operates own a total of 8%, and the free-float is around 34%.