Higher Costs Hit De Beers Profit

De Beers’ earnings fell in 2018 due to the costs of new initiatives such as its Lightbox synthetics business.

Underlying earnings slid 34% to $349 million, as capital expenditure rose 53% to $417 million for the year, the company reported Thursday. That included outlays related to the launch of De Beers’ lab-grown jewelry brand, as well as its Tracr blockchain program, and Gemfair, which aims to help artisanal miners. It also spent more on marketing, exploration and evaluation in Canada.

Volatile conditions also negatively affected margins in De Beers’ trading unit, it added. Consumer demand for diamond jewelry was strong in the first half, but faltered from July onward amid political uncertainty, unstable stock markets, and the US-China tariff dispute. Manufacturers bought less rough as a result.

“In the second half, the low-priced-product segment came under considerable pressure due to weak demand and surplus availability, the rapid depreciation of the rupee, and a reduction in bank financing in the midstream,” De Beers explained.

Revenue still increased 4% to $6.08 billion for the year, driven by strong consumer demand in the first half, with prices growing 1% on a like-for-like basis. Sales of rough diamonds grew 4% to $5.4 billion, while the average selling price climbed 6% to $171 per carat, reflecting lower sales of cheaper goods in the second half. Sales volumes dropped 4% to 33.7 million carats.

De Beers noted an improvement in sales at De Beers Jewellers, its high-end consumer chain. Revenue from Element Six, its industrial-diamond subsidiary, dropped 5% due to lower sales to the oil-and-gas market.
The company expects some of the group-wide challenges to continue this year.

“The outlook for 2019 global diamond-jewelry consumer demand faces a number of headwinds, including the risk of a potential intensification of US-China trade tensions, the Chinese government’s ability to rebalance economic growth towards consumption, and further exchange-rate volatility,” it said.

De Beers maintained its production forecast of 31 million to 33 million carats for this year, down from 35.3 million carats in 2018. However, profitability could suffer as output from its wholly owned Venetia mine in South Africa enters a lull this year amid a transition from open-pit to underground mining. A larger proportion of production will, therefore, come from mines in Botswana and Namibia that it operates in joint ventures with governments.

Those businesses generate lower margins than it receives from deposits it owns completely.

Source: DCLA

Higher Costs Hit De Beers Profit

De Beers’ earnings fell in 2018 due to the costs of new initiatives such as its Lightbox synthetics business.

Underlying earnings slid 34% to $349 million, as capital expenditure rose 53% to $417 million for the year, the company reported Thursday. That included outlays related to the launch of De Beers’ lab-grown jewelry brand, as well as its Tracr blockchain program, and Gemfair, which aims to help artisanal miners. It also spent more on marketing, exploration and evaluation in Canada.

Volatile conditions also negatively affected margins in De Beers’ trading unit, it added. Consumer demand for diamond jewelry was strong in the first half, but faltered from July onward amid political uncertainty, unstable stock markets, and the US-China tariff dispute. Manufacturers bought less rough as a result.

“In the second half, the low-priced-product segment came under considerable pressure due to weak demand and surplus availability, the rapid depreciation of the rupee, and a reduction in bank financing in the midstream,” De Beers explained.

Revenue still increased 4% to $6.08 billion for the year, driven by strong consumer demand in the first half, with prices growing 1% on a like-for-like basis. Sales of rough diamonds grew 4% to $5.4 billion, while the average selling price climbed 6% to $171 per carat, reflecting lower sales of cheaper goods in the second half. Sales volumes dropped 4% to 33.7 million carats.

De Beers noted an improvement in sales at De Beers Jewellers, its high-end consumer chain. Revenue from Element Six, its industrial-diamond subsidiary, dropped 5% due to lower sales to the oil-and-gas market.
The company expects some of the group-wide challenges to continue this year.

“The outlook for 2019 global diamond-jewelry consumer demand faces a number of headwinds, including the risk of a potential intensification of US-China trade tensions, the Chinese government’s ability to rebalance economic growth towards consumption, and further exchange-rate volatility,” it said.

De Beers maintained its production forecast of 31 million to 33 million carats for this year, down from 35.3 million carats in 2018. However, profitability could suffer as output from its wholly owned Venetia mine in South Africa enters a lull this year amid a transition from open-pit to underground mining. A larger proportion of production will, therefore, come from mines in Botswana and Namibia that it operates in joint ventures with governments.

Those businesses generate lower margins than it receives from deposits it owns completely.

Source: DCLA

Rare 88ct. Diamond to Lead Sotheby’s Hong Kong

A flawless white diamond with a high estimate of nearly $13 million will head up April’s Magnificent Jewels and Jadeite auction at Sotheby’s in Hong Kong.

The oval brilliant-cut, 88.22-carat, D-color, flawless, type IIa stone is one of only three oval diamonds over 50 carats offered in auction history, Sotheby’s said Tuesday. The stone — which has a presale estimate of $11.2 million to $12.7 million — is the largest to go under the hammer in more than five years.

“For those who have had the chance to see the diamond, one adjective comes back: ‘breathtaking,’” said David Bennett, worldwide chairman of Sotheby’s international jewelry division. “Barely any diamonds of this weight are known to possess the same exceptional qualities of purity and perfection as this remarkable stone, which is so full of fire and blinding brilliance.”

The diamond comes from a 242-carat rough stone recovered from De Beers’ Jwaneng mine in Botswana, and took several months to cut and polish, Sotheby’s added.

Source: DCLA

Rare 88ct. Diamond to Lead Sotheby’s Hong Kong

A flawless white diamond with a high estimate of nearly $13 million will head up April’s Magnificent Jewels and Jadeite auction at Sotheby’s in Hong Kong.

The oval brilliant-cut, 88.22-carat, D-color, flawless, type IIa stone is one of only three oval diamonds over 50 carats offered in auction history, Sotheby’s said Tuesday. The stone — which has a presale estimate of $11.2 million to $12.7 million — is the largest to go under the hammer in more than five years.

“For those who have had the chance to see the diamond, one adjective comes back: ‘breathtaking,’” said David Bennett, worldwide chairman of Sotheby’s international jewelry division. “Barely any diamonds of this weight are known to possess the same exceptional qualities of purity and perfection as this remarkable stone, which is so full of fire and blinding brilliance.”

The diamond comes from a 242-carat rough stone recovered from De Beers’ Jwaneng mine in Botswana, and took several months to cut and polish, Sotheby’s added.

Source: DCLA

Graff To Unveil A Watch Paved With 60 Fancy Yellow Diamonds At Baselworld

For the upcoming Baselworld watch and jewelry trade fair, Graff will unveil an important collection of jeweled watches, each showcasing diamonds using what the company describes as “pioneering jewelry watchmaking skills.” The first watch in the collection was unveiled Tuesday with the entire piece paved with 60 fancy vivid yellow diamonds totaling more than 25 carats. The price of the watch was not released.

To add to the color theme, the diamonds are set on a yellow gold case, bracelet and dial. In order to meet this challenge of setting this many exceptional diamonds on a watch, Sam Sherry, Graff’s head of Technologies, devised a jointing system that Graff has developed over the past few years to create flexible bracelets while optimizing the natural beauty of the stones.

Graff’s London atelier worked in conjunction with Graff’s Swiss watchmaking team, Graff Luxury Watches, to create this synthesis of haute horology and diamond setting.

This is not the first time Graff has presented a statement bejeweled watch at Baselworld. In 2014, the first year the luxury brand exhibited at the fair, it was the “Hallucination,” a women’s watch covered in a kaleidoscope of 110 carats of rare fancy colored diamonds. Graff claimed at the time it was “estimated to be the most valuable watch ever created.”

The following year Graff unveiled “The Fascination,” a transformable watch covered in 152.96 carats of white diamonds that was valued at $40 million. The pear shaped watch dial on the center of the diamond covered bracelet is removable and can be replaced with a 38.13 carat D flawless, pear shaped diamond, cut and polished by Graff. When the center diamond isn’t in use on the bracelet it is placed on a shank of a ring. So a woman can wear a pure diamond bracelet, an opulent diamond covered watch with a matching ring, or wear either piece by itself.

In 2017, it was the “Princess Butterfly Secret Watch,” covered in diamonds and gemstones mounted with a an invisible setting. To view the time, the owner pushes on one of the center round diamonds and the butterfly wings slide apart to reveal the watch dial.

Source: forbes.com

Graff To Unveil A Watch Paved With 60 Fancy Yellow Diamonds At Baselworld

For the upcoming Baselworld watch and jewelry trade fair, Graff will unveil an important collection of jeweled watches, each showcasing diamonds using what the company describes as “pioneering jewelry watchmaking skills.” The first watch in the collection was unveiled Tuesday with the entire piece paved with 60 fancy vivid yellow diamonds totaling more than 25 carats. The price of the watch was not released.

To add to the color theme, the diamonds are set on a yellow gold case, bracelet and dial. In order to meet this challenge of setting this many exceptional diamonds on a watch, Sam Sherry, Graff’s head of Technologies, devised a jointing system that Graff has developed over the past few years to create flexible bracelets while optimizing the natural beauty of the stones.

Graff’s London atelier worked in conjunction with Graff’s Swiss watchmaking team, Graff Luxury Watches, to create this synthesis of haute horology and diamond setting.

This is not the first time Graff has presented a statement bejeweled watch at Baselworld. In 2014, the first year the luxury brand exhibited at the fair, it was the “Hallucination,” a women’s watch covered in a kaleidoscope of 110 carats of rare fancy colored diamonds. Graff claimed at the time it was “estimated to be the most valuable watch ever created.”

The following year Graff unveiled “The Fascination,” a transformable watch covered in 152.96 carats of white diamonds that was valued at $40 million. The pear shaped watch dial on the center of the diamond covered bracelet is removable and can be replaced with a 38.13 carat D flawless, pear shaped diamond, cut and polished by Graff. When the center diamond isn’t in use on the bracelet it is placed on a shank of a ring. So a woman can wear a pure diamond bracelet, an opulent diamond covered watch with a matching ring, or wear either piece by itself.

In 2017, it was the “Princess Butterfly Secret Watch,” covered in diamonds and gemstones mounted with a an invisible setting. To view the time, the owner pushes on one of the center round diamonds and the butterfly wings slide apart to reveal the watch dial.

Source: forbes.com

Gold miner Richard Duffy appointed new chief of Petra Diamonds

Petra Diamonds has appointed former gold miner Richard Duffy as chief executive as it grapples with a heavy debt load following a period of expansion.

Mr Duffy was previously chief financial officer and head of African operations at AngloGold Ashanti before setting up a company that develops renewable energy projects in Africa.

Mr Duffy “will be critical to drive Petra’s transition from a phase of intensive capital expenditure and expansion to a focus on steady-state, cash-generative operation,” Petra’s chairman, Adonis Pouroulis, said. The appointment comes as Petra faces lower diamond prices and $559m of net debt that it needs to pay off.

Diamond prices were about 4 per cent lower in the six months ending December due to “industry wide lower prices for lower quality” small stones, the company said on Monday. Average pricing for diamonds at the company’s flagship Cullinan mine in South Africa fell to $96 a carat, the lowest six-month level since 2010.

Petra said adjusted earnings before interest tax and other items, or ebitda, fell 6 per cent to $75.6m in the second half of last year. It reported a net loss of $57.9m, from a loss of $117.7m in the same period a year earlier.

Revenues rose by 8 per cent to $207.1m as diamonds sold increased by 15 per cent to 1.74m carats. The company said reduction of its debt is a priority.

It has $90.7m in cash at the bank and said net debt is expected to be “largely flat” during the first half of this year if diamond prices remain at the same levels.

Source: ft.com