De Beers CEO steps down after stellar results

Posted July 27, 2010 |

De Beers chief executive Gareth Penny revealed he will step down as the company announced soaring first-half sales and profits.

Penny, who has been at the helm of De Beers for five years, steered the company through the worst recession to hit the company in its 122-year history. His decision to exit the business has sent shockwaves through the diamond industry.

EBITDA for the six months to June 30, 2010, more than doubled to US$762 million ($850.8 million) against the same period the previous year.

Sales of rough diamonds, including those through joint ventures, rocketed 84 per cent to US$2.6 billion ($2.90 billion), thanks to increased demand from retail markets – particularly India and China. The company said it recovered 15.4 million carats during the period - more than double the amount mined in 2009.

Total sales soared 74.1 percent to US$2.98 billion ($3.33 billion).

De Beers attributed the strong performance to a stabilisation of the global economy, which it said led to an increase in production and prices.

Under Penny, De Beers reduced its global workforce by 25 per cent in 2009, decreased its cost base by 45 per cent and halted production completely at a number of mines.

De Beers chairman Nicky Oppenheimer said: “These results are a testament to Gareth Penny’s leadership, which saw the company through the recession, and positioned it for strong revenue growth as we emerged into recovery.”

The company is now searching for a new chief executive and Oppenheimer said he remains optimistic about the future. “I have full confidence in the experienced management team that Gareth has assembled, who will carry on our current course to deliver shareholder value,” he said.

Penny will remain as chief executive until the end of September.

After his departure, chief financial officer Stuart Brown and chief commercial officer Bruce Cleaver will assume the role of acting joint chief executives.