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Dominion Diamond Records 3Q Profit of $34M

Dec 12, 2014 8:19 AM   By Jeff Miller
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RAPAPORT... Dominion Diamond Corporation reported that production, sales and profit were all stronger than expected during the third quarter that ended on October 31. Profit rose to $33.6 million compared with a loss of $6.5 million  one year ago. Consolidated net income attributable to shareholders totaled $25.5 million or 30 cents per share.  Rough diamond sales jumped 50.1 percent to $222.3 million, cost of sales rose 7.3 percent to $147 million and gross margin increased to 33.9 percent, compared with 8 percent one year earlier.

Diavik's diamond sales rose 52 percent to $80.4 million, although the average price fell $2 to $116 per carat. Gross margin as a percentage of sales improved to 34.6 percent compared with 24.4 percent. Operating earnings from the mine totaled  $26.9 million, up from $11.8 million.

Ekati's diamond sales rose 49 percent to $141.9 million with an average price of $310 per carat. Gross margin was 33.5 percent versus a net negative 1 percent one year earlier. Operating earnings totaled $47 million compared with an operating loss of $1.3 million.

Dominion Diamond stated that it had  unrestricted cash and cash equivalents of $288.8 million as of October 31 and restricted cash of $112 million. Rough diamond inventory totaled  1.9 million carats,  with a market value of approximately $350 million, of which approximately $185 million represented inventory available for sale, with the remaining $165 million being sorted. Working capital totaled  $629.5 million, up from $572.1 million as of January 31, 2014.

The rough diamond market feels the pain of  tighter credit and lower-than-expected demand from the retail markets of India and China, Dominion stated.  The report also noted that demand for rough diamonds that produce the commercial ranges of polished goods remained resilient, but demand for the better-quality stones has not improved, driving prices lower.

Brendan Bell, the acting CEO, said, "While we continue to focus on the strategic development of our future resources, we are also taking a very disciplined approach to executing on our current mine plan. This disciplined approach is apparent in these strong results."

Dominion Diamond intends to initiate a dividend after releasing its fiscal-year results in April. Dan Jarvis, the acting chairman, said,  "This decision by the board is based on our confidence that we can both fund our expansion plans for the business as well as sustain regular distributions to our shareholders."

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Tags: Canada, Diamond mining, Diavik, Dominion Diamond, ekati, Jeff Miller, prices, profit, Shareholders
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