Diamond mining giant De Beers on Wednesday reported a 10% rise in total sales to $3,74-billion for the half-year ended June from $3,402-billion a year ago. This includes sales of industrial diamonds as well as sales through the cutting centres and its sales unit Diamdel.
Sales of rough diamonds were up 10% at $3,3-billion.
Diamond production, in spite of energy challenges in Southern Africa, was 24,2-million carats — only marginally behind 2007.
Underlying earnings were up 8% to $350-million, while earnings before interest, tax, depreciation and amortisation (Ebitda) were 31% higher at $831-million.
The group said the strong growth in Ebitda is related to expansion projects coming on stream in the period.
These projects are in a phase of commissioning, with the result that growth in underlying earnings and cash generation are not similarly matched due to higher finance charges; losses on which deferred tax has not been accounted for; and funding for increased working capital.
Looking ahead, the group said economic conditions require a more cautious outlook for the second half of 2008.
“Mass-market retail diamond jewellery sales have been impacted by economic issues in the most important market, the United States. While strong growth in China, India, Russia and the Middle East has helped to mitigate the impact of the US slowdown, the overall retail market is likely to be challenging,” De Beers said.
While demand for high-end diamonds is likely to remain robust, the smaller, lower qualities, which are more dependent on US demand, are expected to remain subdued, it concluded. — I-Net Bridge