Sourcing

Alrosa Ends Difficult Year With Strong Q4

SourcingJan 22, 2021

Alrosa Ends Difficult Year With Strong Q4

The miner’s sales were down for the full year, but it is not as bad as it could have been considering sales ground to a halt mid-year due to the pandemic.

Alrosa’s rough and polished diamond sales dropped 16 percent on the year but rose 33 percent in the fourth quarter due to recovering consumer demand in the second half of 2020. (Photo credit: Alrosa)

Moscow—Sales fell by double digits for Alrosa in 2020, but the company ended the year on an upswing it says has continued into 2021.

The diamond miner reported Thursday that revenue from rough and polished diamond sales totaled $2.8 billion in 2020, down 16 percent year-over-year. But fourth quarter sales rose 33 percent year-over-year to $1.22 billion.

In volume terms, Alrosa’s annual sales totaled 32 million carats, down 4 percent year-over-year but up more than double in the fourth quarter, as the recovery in consumer demand that started in the second half of the year in China and the United States accelerated.

“Many U.S. retailers launched their holiday offers early to ensure a more even distribution of demand and allow for social distancing,” the company said in the release announcing Q4 and full-year results.

“As a result, the Christmas holiday season in the U.S. kicked off with strong online sales as the pandemic pushed consumers to shop online. Another sustainable trend in the retail sector is the steady recovery of sales in mainland China, where travel restrictions make Chinese consumers spend more domestically.”

Jewelers interviewed by National Jeweler in the month of December said the same; consumers were shopping early to avoid the crowds.

And they were spending money that couldn’t be used for travel, dining out and other experiences on jewelry, particularly diamond jewelry.

RELATED CONTENT: Strong Start Has Jewelers Hopeful for the Holidays

In a Jan. 7 webinar hosted by National Jeweler, guests Edahn Golan, Peter Smith and Sherry Smith all commented on diamond jewelry’s strong performance in 2020, which they attributed to it being a low-risk choice in an uncertain time and the pandemic spurring proposals.

“When people feel stressed and anxious and you’ve got all of this uncertainty in your life, you’re going to make safe choices,” Peter Smith said. “Diamonds are a very safe choice. I’m waiting to see the first T-shirt that says, ‘I’ve got too many diamonds.’

“That just doesn’t happen. They just continue to be a safe choice.”

RELATED CONTENT: Watch—Our Webinar on 2021 Predictions

In addition to sales declining, Alrosa’s production also dropped in 2020, falling 23 percent in the fourth quarter to 7.1 million carats and declining 22 percent on the year to 30 million carats total.

Alrosa and the world’s other main diamond supplier, De Beers Group, dialed back production last year to save money as COVID-19 halted

business worldwide. Some diamond mines closed entirely for a period while others operated at reduced capacity with skeleton crews.

Alrosa started the year with a production goal of 34 million carats but scaled back to 28-31 million carats about halfway through 2020, ultimately ending the year right in the middle of that range.

It also allowed customers additional flexibility—which the miner has extended into 2021—and implemented a “price-over-volume” strategy, which helped stabilize rough diamond prices during the crisis, all in the interest of the sustainability and stability of the diamond industry, Alrosa said.

In the early months of 2021, Alrosa said diamond cutters and polishers are increasing production to 100 percent capacity after having to cut back in 2020 due to COVID-19.

They anticipate stable orders in the first quarter of the year, as diamond dealers and retailers look to replenish inventories following the holiday season and, in China, ahead of the new year on Feb. 12.
Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.

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