De Beers Sales Drop, But Profits Rise
By Rob Bates -- JCK Online, 8/1/2007 2:00:00 AM
De Beers' rough diamond sales through its Diamond Trading Company reached $6.15 billion in 2006—its second- highest number, but down from 2005's record $6.5 billion.
The company said the sales drop reflected “reduced purchases from Alrosa in line with the commitments given to the European Commission, and the continued challenging environment in the wholesale market for rough diamonds, where a lack of liquidity, margin pressure, and increased financing costs impacted pipeline demand.”
Net earnings, however, shot up 32 percent, to $730 million, because of the sale of 26 percent of its South African subsidiary, De Beers Consolidated Mines, to black economic empowerment company Ponahalo, and the sale of the group's interest in the Fort à la Corne joint venture in Canada.
The company said there was solid consumer demand for diamond jewelry in 2006, with China and India reporting strong sales growth, and the U.S. market growing in line with gross domestic product.
In addition, managing director Gareth Penny noted that De Beers had record production in 2006—51 million cts., up from 49 mil-lion cts. the previous year.
