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Articles from DIAMOND JEWELLERY (982 Articles)
De Beers has experienced a heavy profit slump
De Beers’ profits slashed by half
Posted July 31, 2012 |
Diamond mining and jewellery company De Beers has announced a 50 per cent drop in profits in the first half of 2012.
De Beers has blamed challenging market conditions for the US$600 million fall in sales. The company announced pre-tax profit of US$502 million in its half-year report compared to the $1.01 billion profits earned in the first half of 2011.
Problems with liquidity and excess stock in India were raised as contributors to the profit loss.
“While overall consumer demand for polished diamonds remained relatively healthy, sightholder demand was impacted by increased stock in the cutting centres, tightening liquidity and challenging conditions in India,” read a statement from De Beers. “However, early indications are that the US market continued to perform well, and the Chinese market, while slowing considerably, still showed positive growth.”
De Beers’ retail arms also had mixed fortunes, with De Beers Diamond Jewellers experiencing a down turn in its high-end sales, while the company’s diamond jewellery brand Forevermark posted results consistent with its wide global expansion plans.
De Beers drew other positives from the results, noting a reduction in third party debt to $980 million, down from over $1.25 billion, and the settlement of the long-running antitrust lawsuit finally paving the way for De Beers to freely operate in the United States in the future.
De Beers admitted that market conditions would remain difficult for the remainder of the year, but predicted minor profit growth compared to the recent results.
“Provided there are no unforeseen economic shocks, De Beers expects to see moderately positive growth in global diamond jewellery sales for the full year 2012, albeit at relatively modest levels, especially when compared to the exceptional growth levels seen in 2011,” the statement read. “In the short term, the USA, China, the Gulf and Japan are expected to contribute the bulk of the growth, while India and Europe are expected to remain weak.”
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