Johannesburg - Diamond company De Beers yesterday reported a 2 percent increase in profits to $585 million (R8.37 billion) as the company benefited from tighter cost controls and favourable exchange rates, the company said.
Chief executive Bruce Cleaver said: “Our profit is slightly up at $585m on revenues of $3.3bn, which is primarily due to a 29 percent increase in sales volumes to 17.2 million carats... We were able to keep tight control of our costs, and that along with favourable exchange rates has helped our financial performance.”
Anglo American owns 85 percent of De Beers.
Revenue advanced 8.2 percent to $3.27bn in the six months to end June, parent company Anglo American reported. Rough diamond sales jumped 11 percent to $3.1bn, spurred by a 29 percent leap in sales volume, which outweighed a 14 percent drop in average realised prices to $177 per carat. Other revenue from its Element Six industrial diamond unit fell while its Forevermark brand expanded to 1 874 stores, up 6.5 percent from the beginning of the year.
Rough diamond production at De Beers decreased by 15 percent to 13.3 million carats in the first half of the year, compared with 15.6 million carats over the same period in the previous year. The company said that the decrease reflected the decision to reduce production in response to prevailing market conditions during the second half of 2015.
De Beers reiterated its 2016 production outlook of 26 to 28 million carats, a decline from 29 million carats last year. The company said globally the macro-economic environment remained supportive of diamond demand growth in 2016, albeit with downside risks meaning caution remains appropriate.
Cleaver said looking ahead to the remainder of the year the company expects mildly positive to flat global consumer demand growth.
“We need to retain a cautious outlook. Macro-economic shocks like Brexit in the UK, and uncertainty in Europe and Middle East can have a destabilising effect on demand. Our production forecast remains the same and we need to continue our focus on costs through savings in production costs, overheads and capital expenditure and disposal proceeds throughout 2016,” he said.
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