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MOSCOW, May 25 (Reuters) - Russian diamond miner Alrosa , the world's largest producer of rough diamonds in carat terms, reported a 55 percent drop in first-quarter net profit on Thursday, blaming a stronger rouble.
State-controlled Alrosa and Anglo American's De Beers unit produce about half of the world's rough diamonds.
Alrosa announced a first-quarter net profit of 22.7 billion roubles ($404 million) as earnings before interest, taxation, depreciation and amortisation (EBITDA) fell 41 percent from a year earlier to 35.2 billion roubles.
Revenue declined 17 percent from a year earlier to 84.8 billion roubles.
"Rouble appreciation against the U.S. dollar, and a change in the product mix resulted in a decrease of gem-quality rough diamond sales year-on-year," Alrosa said in a statement.
Revenue has begun to improve however, rising 38 percent in January to March from the previous quarter as Indian demand for rough diamonds recovered.
Alrosa has previously said that it increased diamond production by 9 percent in the first quarter from a year earlier to 8.9 million carats, while diamond sales were well above production and reached 14.1 million carats for the period.
The high sales mean Alrosa's inventory was reduced by 5.2 million carats to about 13 million carats and is now closer to Alrosa's long-term target of 10 million carats.
Analysts at VTB Capital said in a note on Thursday that Alrosa's EBITDA missed their expectations due to the accounting treatment of inventories but a free cash flow of 35 billion roubles exceeded their estimates by 17 percent.
VTB Capital said a current recovery in diamond prices might enable Alrosa to report comparable earnings in the second quarter despite seasonally lower sales volumes and a stronger rouble.
Alrosa's share price in Moscow was down 2.6 percent on Thursday, underperforming a 0.2 percent decline in the MICEX index. ($1 = 56.2022 roubles) (Reporting by Polina Devitt and Diana Asonova; Editing by Susan Fenton)