De Beers CEO puts a sparkle on desultory results of third sale
For the year to date, the company is more than $100m behind last year
De Beers, the largest producer of rough diamonds by value, reported revenue of $520m for its third sale of 2018, the lowest level in at least three years.
The income was substantially lower than that of the previous matching period and at the second sale. De Beers realised sales of $586m in the matching period a year earlier and it generated $563m for the second of 2018’s 10 annual sales the company makes to hand-picked clients who travel to Gaborone to buy diamonds from the 85%-held Anglo American subsidiary in events called sights.
De Beers CEO Bruce Cleaver was, however, upbeat about the sales numbers and the market in general. "While the second quarter of the year is traditionally a seasonally slower period, we continued to see good rough diamond demand in the third sales cycle of 2018 as diamond businesses have focused on restocking following healthy consumer demand for diamond jewellery in the US and China."
In the first three sales of 2018, De Beers is $113m behind sales for the matching period in 2017.
"Manufacturers are also under pressure from the rough side after De Beers raised prices an estimated 2% to 3% in the first quarter. Cutters are protecting their profits with steady polished prices, and buyers have adapted to the higher rates that emerged in January and February," polished diamond industry experts Rapaport said recently.
So far in 2018, De Beers has notched up sales of $1.755bn compared with $1.868bn a year ago. At this stage in 2016, De Beers had sales of $1.828bn.
"For De Beers to reach our forecasts, they would need to average $528m per sight but this is traditionally first half weighted," Tyler Broda from RBC Europe said. "With a stronger back half [of the year] expected, we continue to see De Beers on track."
Cleaver has guided the market to rough diamond output of 34-million to 36-million carats for 2018. De Beers mined 33.5-million carats in 2017.