Pe­tra Di­a­monds’ core profit up, CEO to step down

The East African - - BUSI­NESS -

A JOINT RE­PORT

PE­TRA DI­A­MONDS re­ported a jump in full-year ad­justed core earn­ings last week on Mon­day due to a rise in pro­duc­tion at its con­tin­u­ing mines and said its chief ex­ec­u­tive would step down. This pushed Pe­tra’s London-listed shares, which are down 40 per cent this year, to jump more than six per cent to their high­est in over a month while the wider in­dex inched slightly lower.

Pe­tra was ham­pered by a stronger South African rand and op­er­a­tional de­lays in the first half of the year as well as the con­fis­ca­tion of a con­sign­ment of di­a­monds in Tan­za­nia that left it strapped for cash and in crip­pling debt. But im­proved per­for­mance in its di­a­mond mines in the sec­ond half, a cash raise in June and a re­ver­sal in rand strength have helped the com­pany cut debt and raise core earn­ings.

Ad­justed earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion (Ebitda) rose to $195.4 mil­lion from $142 mil­lion in the pre­vi­ous year.

Pe­tra did not name a suc­ces­sor for its chief ex­ec­u­tive and ex­pects to an­nounce two non-ex­ec­u­tive ap­point­ments next month. Out­go­ing CEO Jo­han Dip­pe­naar has been at the helm since Pe­tra merged with Crown Di­a­monds in 2005.

“Its been a hard 13 years … we have made six ac­qui­si­tions, a sub­stan­tial re­build and re­design and that was quite a job,” said Mr Dip­pe­naar, adding, “In the June 2017 fi­nan­cial year, we ex­pe­ri­enced a lot of chal­lenges in ef­fect­ing this buildup but we fought back well this year and the sec­ond half was solid.”

The Tan­za­nian gov­ern­ment has not yet re­turned the con­sign­ment of di­a­monds that it con­fis­cated from Pe­tra last year af­ter it tem­po­rar­ily blocked the com­pany’s ex­ports. At the same time, the com­pany was hit by a two-week strike in South Africa.

“There have been a lot of un­com­fort­able con­ver­sa­tions with in­vestors over the past two years … they had to do some­thing for share­hold­ers …” said an in­dus­try source.

Pe­tra’s chair­man Ado­nis Pouroulis said the com­pany was into the fi­nal stage of its ex­pan­sion plans and was po­si­tioned to reap the ben­e­fits.

Pro­duc­tion rose 19 per cent to 3.8 mil­lion carats, ex­clud­ing the KEM Joint Venture be­cause it was sold. The com­pany slipped into a net loss due to an im­pair­ment and a higher de­pre­ci­a­tion charge as well as higher fi­nanc­ing costs.

In July, Pe­tra fore­cast lower than es­ti­mated pro­duc­tion for 2019 af­ter reporting 2018 out­put at the bot­tom end of its fore­cast range.

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