De Beers aims to increase diamond demand, diamond prices, and its earnings

De Beers says it is aiming to increase its core earnings by about 30% to $2 billion annually by 2009, by stimulating demand and pushing up prices, Antwerp Facets News Service reports.

DTC Managing Director Gareth Penny, who will take over as managing director of the De Beers Group next year, said that against the background of flat rough diamond supply forecasts, sustainable price increases could be achieved if the company could continue to raise demand, AFNS reports.

De Beers reportedly said its target is to raise earnings before interest, tax, depreciation and amortization (EBITDA) to $2 billion – a substantial increase on the $736 million rise in EBITDA in the first half of this year, which would work out to $1.47 billion in annualized terms.

The DTC says it will boost worldwide demand for diamonds by continuing its aggressive marketing efforts, AFNS reports. De Beers’ target is to raise growth in demand to around 5 percent annually from an average of 3.2 percent per annum over the past five years.

“We’ve now put ourselves a real stretch target of 5 percent annual growth in our business, which is going to be a challenge for us to meet,” Penny reportedly said.

The firm also plans to raise the value of the group to $12 billion by 2009, AFNS reports. While it is not disclosing the current value, it provided a figure of $9.3 billion when the firm was taken back into private hands four years ago.

Meanwhile, De Beers said diamond sales in the United States in the second half of the year could be hit by rising oil prices.

“The hurricanes, Katrina and Rita, aren’t going to make a significant impact on diamond jewelry consumption, but it is the high oil prices that may have an impact,” Varda Shine, DTC managing director-designate, reportedly said.

U.S. sales in the second half of 2005 could be lower than those in the first six months of the year primarily due to weak sales at the lower end of the market, such as at Wal-Mart, the largest retailer of diamond jewelry in the United States, Shine added.

The possible fall in diamond jewelry sales would not make De Beers revise downwards its target that second half rough diamond sales would be at least at the same level seen in the first half, AFNS reports.

De Beers reported an 8 percent rise in first-half rough diamond sales to $3.2 billion due to rises in prices and strong demand. Rough diamond sales in 2004 were $5.7 billion.