Gemfields loses its lustre as it swings to an annual loss
JOHANNESBURG - GEMFIELDS, the London-headquartered supplier of coloured gemstones, swung to a loss during the year to the end of December 2020 as travel restrictions to curb the spread of the Covid-19 pandemic weighed heavily on the group’s financial performance.
JSE- and AltX-listed Gemfields swung to a loss of $93.2 million (R1.39 billion) for the year to the end of December compared with a $39.1m profit a year earlier, while revenue plummeted to $34.5m from $216.2m in 2019.
Chief executive Sean Gilbertson said last year brought unprecedented challenges as a result of Covid-19, and the results reflected the immense impact of the pandemic.
“Our traditional gemstone auctions were immobilised by the widespread quarantine, travel and congregating restrictions, meaning our clients were severely impeded in carrying out physical inspections of our gemstones, a critical step in purchasing coloured gems,” Gilbertson said.
Gilbertson said that, when combined with the marked stagnation in coloured gemstone trading activity for much of last year, auction revenues fell by almost 89 percent, from 2019’s record high of $200.5m to only $22.3m in 2020.
Due to Covid-19, the principal operations in Zambia’s Kagem mine were suspended for a year between March last year and this month, while the group operated the Montepuez Ruby Mine (MRM) in Mozambique for only four months last year after operations were suspended last April.
MRM had no ruby auctions last year because of the fallout from the Covid-19 pandemic.
Revenues at Fabergé, the group’s prestigious brand, were also severely impacted last year due to the extended periods of closure of directly operated and partner-operated boutiques during the various national lockdowns. Many of Fabergé’s planned events and exhibitions were cancelled due to Covid-19.
Chief financial officer David Lovett said the restrictions on movement to curb the spread of the pandemic prevented customers from selling their inventory at the world’s prestigious gem and jewellery shows, thereby reducing their desire to purchase any further inventory from the group.
“This liquidity crunch, along with the global travel restrictions, has meant that the group has been unable to hold any traditional auctions since the commercial-quality emerald auction in February 2020,” said Lovett.
However, Lovett said a series of sequential emerald mini-auctions were held in November and December last year, whereby bids were placed online after multi-city in-person viewings of the gemstones by customers, generating total revenues of $10.9m.
In February last year, Kagem conducted a commercial-quality auction in Lusaka, Zambia, generating revenue of $11.4m at an average of $4.01 per carat. The Covid-19 pandemic meant that no further traditional auctions were held last year.
Gemfields, which is in the process of selling its Sedibelo mine, approved the $27.9m fair value decrease for the year, bringing its 6.54 percent stake in the mine to $29.6m.
Gemfields shares closed 5.41 percent lower at R1.40 on the JSE yesterday.