The Supervisory Board of ALROSA instructed the top management to provide an increase in sales of core products by 108 million dollars during the formation of the consolidated budget of 2017, the Company reported.
Also, the Supervisory Board instructed to cut long-term investments in 2017 by 3 billion rubles, capital investments (which for 9 months of this year amounted to about 22 billion rubles) by 1.4 billion rubles. Labor costs should be reduced by 1.5 billion rubles, prospecting works – by 150 million rubles.
The labor compensation fund and insurance premiums of ALROSA should be limited to the level of 48.485 billion rubles, the Supervisory Board has decided. Target contribution to Diamond Producers Association will be reserved in the amount of 1.6 billion rubles.
The adjusted consolidated budget should be entered before December 30 this year.
Adjustment of the budget was supported by the majority of state representatives, including the head of the Supervisory Board, RF Finance Minister Anton Siluanov, as well as representatives of Yakutia. ALROSA President Andrei Zharkov (also nominated by the Russian Federation) has voted against.
A source familiar with the preparation of opinions of the Supervisory Board’s members, said to Interfax that the ALROSA President objected, because he considers a decrease of some items on the budget “strong and unjustified.”
The written opinion of some members of the Board, including the independent director Maria Gordon, was not taken into account because of the differences in the wording put for voting and responding.
ALROSA expects stable demand for rough diamonds in 2017, without a sharp fall or rise, and sees no reason to raise prices. This year, the demand for diamonds has recovered after nearly 30 percent drop in sales in 2015 and 15 percent decline in prices. Prices are generally stable in the current year; however, using sales growth ALROSA achieved a sharp increase in financial indicators. The proceeds from diamond sales for the first 9 months of this year amounted to at least $ 3.5 billion (30% higher than last year).
Among other things, the Supervisory Board instructed Zharkov to submit in 1st quarter of 2017 a draft concept of the marketing policy of ALROSA for the period of 2017-2027.