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| Rough diamonds image courtesy of De Beers Group |
De Beers Group said Tuesday that sales of rough diamonds during the first half of 2011 through the Diamond Trading Company (the rough diamond distribution arm of the De Beers) increased 33 percent, year-over-year, to $3.5 billion This is the highest ever sales figure recorded for the first half of the year, buoyed by continued retail demand from the Indian and Chinese consumer markets and stronger than expected demand in America.
The company, which produces more than a third of the world’s rough diamonds, also reported record EBITDA of almost $1.2 billion, a 55 percent increase over the first the first half of 2010, reflecting the impact of “excellent” price growth during the period ended June 30. It predicts continued demand for the remainder of 2011.
“Sales during the period have been exceptional, driven mainly by continued growth in the Middle East, Indian and Asian retail markets and their impact on rough price growth,” De Beers said in a statement. Despite the ongoing turmoil with the global economy, we are encouraged by the continued strong growth in price and demand during the first six months of 2011. De Beers is confident that the exceptional growth in retail markets in India and Asia will continue to drive demand for diamonds.”
The company also said that reports from the recent jewelry tradeshows in Las Vegas “indicate that the all-important Christmas season in the U.S., and Diwali, are set to be strong.”
At a De Beers board meeting in Luxembourg on July 19, Philippe Mellier was appointed CEO of the De Beers Group. The company announced in May that he was being appointed. In the same meeting, Stuart Brown, CFO, said he would be resigning from the board, which will take effect at the end of July. He was with Be Beers for almost 20 years.
De Beers—which owns mines in South Africa, Botswana, Canada and Namibia—said it has continued to focus on efficiency improvements and on maintaining a lower sustainable level of overhead base, which it says has helped the bottom line. In the first six months of 2011, De Beers’ production totaled 15.53 million carats, an increase of 100,000 carats over the same period in 2010.
In its retail activities for the first-half of the year, Forevermark, the De Beers Group owned diamond brand, continues to expand into the retail markets of China, Hong Kong and Japan, and has recently launched in India, Singapore and the Caribbean. The brand is now available in a small number of stores in the U.S., with further expansion planned later this year. During the same period, De Beers Diamond Jewellers (De Beers’ joint venture with LVMH) announced the launch of the brand in China with the opening of its first mainland store in Beijing, its first store in Kazakhstan in Almaty and a new store in Dubai. The company will continue to expand in 2011 with in China and Hong Kong.
Element Six, De Beers Group industrial diamond group, “recorded a good first half performance in respect of both sales and profitability, with robust demand across its product ranges,” De Beers said in its earnings report. “Operating performance was impacted by, inter alia, operating challenges and a weak US dollar, but Element Six is well positioned for the remainder of the year.”