Cape Town – Diamond mining company De Beers has said it
is optimistic about its growth prospects after it reported a 30 percent
increase in revenue to $6.1 billion (R79.74 billion) for the 2016 financial
year, saying this was a result of a decisive decision taken across the business
in 2015.
The company said on Tuesday its earnings before interest,
taxes, depreciation and amortisation also shot up 42 percent to $1.4 billion from
$900 million during the year to December 2015.
De Beers said it benefited on the favourable exchange
rates and its fortunes were lifted by cost-saving measures and portfolio
changes it implemented.
“We put pretty decisive actions at De Beers which paid
off last year,” said group head of strategy and corporate affairs, Gareth
Mostyn. “We put our focus on our customers, helping them get what they really
needed.”
The company said its unit costs decreased 19 percent from
$83/carat to $67/carat during the period, while revenue increased driven by
higher rough diamond sales, which increased by 37 percent to $5.6 billion. It
said this was pushed by a 50 percent increase in consolidated sales volumes to
30 million carats from 19.9 million carats in 2015, and was partly offset by a
10 percent decrease in the average rough diamond price of $187/carat.
Slower in SA
The company said production in South Africa, however,
declined by 9 percent year-on-year to 4.2 million carats, due to the early
completion of the sale of Kimberley Mines in January 2016, which was partly
offset by an increase of 12 percent at the Venetia mine, owing to the
processing of higher grades.
It said despite, some macro-economic challenges, it
remained cautiously optimistic as the global consumer demand for diamonds was
expected to increase this year after falling flat last year.
Despite being the most mature market, the US continues to
see the strongest consumer demand, and this is set to continue in 2017, Mostyn
said.
Demand from Chinese consumers increased domestically,
albeit offset by reduced international spend and the exchange rate impact.
"Longer-term, the sector is likely to continue to see benefit from a
continuing rise in the world’s middle classes in emerging markets, particularly
in China and India, Mostyn added.
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De Beers added that global growth this year would be
dependent on a number of macro-economic factors, including the economic policy
of the new administration in the US, the strength of the US dollar impacting
consumer demand, the impact of the demonetisation policy in India and economic
performance in China.
Mostyn said these could have a considerable negative
impact on demand.
He said the company also invested in its mining assets in
South Africa and Bostwana, while also launching the firm’s offshore business in
Namibia during the first half of the year.
Mostyn added that the firm focused on its marketing
ability, especially in America.