Petra Diamonds’ core profit up, CEO to step down
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.