De Beers Sets New Sales Record

De Beers hit another sales record in 2004, when rough sales through its Diamond Trading Company jumped 3 percent, to hit $5.7 billion.

A statement noted that during 2004, "the DTC raised its rough-diamond prices on three occasions, the cumulative effect of which was that sales by the DTC in 2004 were at prices, on average, 14 percent higher than in 2003." The first sight of 2005 also saw a 3 percent increase.

Headline earnings for the year were $652 million, 11 percent higher than for 2003.

The statement called 2004 "another good year for the diamond industry." It said that global diamond-jewelry retail sales rose 6 percent in local currency, and 8 percent in U.S. dollars. It said the United States "reports a solid Christmas season overall, despite concerns over high personal debt levels."

Executives credited the company's Supplier of Choice strategy for the rise in both De Beers' and overall sales. "We have seen a proliferation of brands, we have seen marketing through efficient channels, and both of these have contributed to the performance," said Nicky Oppenheimer, company chairman, in a conference call following release of the results.

Managing director Gary Ralfe added the results "give us great confidence that under Supplier of Choice we now have the right suite of strategies to be driving demand downstream."

The statement included a few cautionary notes, stating that "levels of polished stocks in the cutting centers declined but cutting-center bank debt continued to climb in line with the increase in the volume of trade. However, the lending banks seem reasonably comfortable with the ability of the trade to finance the higher level of debt."

It also noted that "2005 is likely to be a more challenging year for the diamond industry. However, with the transformation of the industry that has taken place over the last few years, there is now growing evidence that diamonds are competing favorably with other luxury products."