De Beers basks in 42% rise in earnings
Growth prospects for 2016 have increased to $6.1bn
DIAMOND mining company De Beers has said it is optimistic about its growth prospects after it reported a 30 percent increase to $6.1 billion (R79.74bn) for the 2016 financial year, saying this was a result of a decisive decision taken across the business in 2015.
The company said yesterday its earnings before interest, taxes, depreciation and amortisation also shot up 42 percent to $1 406bn from $900 million during the corresponding period in 2015.
Fortunes lifted
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 the 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 $5.6bn.
It said this was pushed by a 50 percent increase in consoli- dated 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.
The company said production in South Africa, however, declined by 9 percent yearon-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.
Global growth this year would be dependent on a number of macroeconomic factors.
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.
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.