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Weaker Product Mix Dents De Beers Sales

Revenue falls 4% in first half as Indian cutters restock low-value goods.
Jul 27, 2017 4:35 AM   By Rapaport News
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 De Beers’ revenue fell in the first half of 2017 as restocking by Indian manufacturers resulted in the miner selling a greater proportion of lower-value goods than a year ago.

Total revenue declined 4% to $3.13 billion, with rough-diamond sales down 6.5% to $2.9 billion, De Beers’ parent company Anglo American reported Thursday. The average selling price decreased 12% to $156 per carat, while sales volume grew 7% to 18.4 million carats.

“This reflected stronger demand for lower-value goods in [the first quarter of 2017] following a recovery from the initial impact of India’s demonetization program in late 2016,” Anglo American said.

However, a 4% year-on-year increase in the miner’s average rough-price index, which measures like-for-like price changes, partly compensated for the lower-value product mix, it added.

Underlying earnings before interest and taxes (EBIT) declined 6% to $548 million, though underlying EBITDA — which also discounts depreciation and amortization — increased 3% to $786 million, mainly because of savings resulting from the closure of the Snap Lake mine in Canada and other efficiency measures. A stronger performance by Element Six, De Beers’ industrial-diamond unit, also contributed to the rise in EBITDA.

“Sentiment in the midstream remains positive following a reasonable retail season [in the fourth quarter of 2016], with evidence of Chinese retailers restocking and demonetization in India having less impact than anticipated,” the miner continued. “This has supported good demand for De Beers’ rough diamonds.”

Image: Diamond Producers Association
Tags: Anglo American, Canada, China, De Beers, element six, India, Indian manufacturers, Rapaport News, Snap Lake
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