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De Beers Contributes $1B in Profit to Anglo American

Diamond Revenue +5% to $6B

Feb 14, 2014 6:18 AM   By Jeff Miller
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RAPAPORT... De Beers revenue rose 5 percent year on year to $6.4 billion in 2013, according its parent company Anglo American, which reported group results this morning. De Beers rough diamond price index  increased 2 percent with an ''average realized'' rough diamond price hike of 5 percent in 2013. De Beers noted that rough prices rose strongly  during the first half of last year but this trend reversed during the second half. De Beers operating profit jumped to $1.003 billion from a revised $474 million in 2012. The diamond firm's contributing share of Anglo's profit nearly doubled to 15 percent from 8 percent.

Earnings before interest, tax and amortization rose to $1.451 billion from $712 million. Capital expenses during the year increased to $551 million from $161 million.  During 2013, De Beers successfully completed its sales office migration  from London to Botswana.  de beers results

As reported earlier, De Beers production increased by 12 percent to 31.2 million carats, driven by improvements from operations in all regions, but in particular, Botswana and Canada.

In Botswana, infrastructure construction at Debswana’s Jwaneng Cut-8 project is complete, where the operation holds an estimated 96 million tonnes of ore to be treated, containing approximately 113 million carats of mainly high-quality diamonds. De Beers began construction of an  underground mine beneath the open pit at Venetia in South Africa in September, an investment valued at $2 billion, and it plans to complete the project in 2021 at which time the life of the mine will be extended  to 2040 at least. Venetia underground expects to  treat approximately 129 million tonnes of ore, containing an estimated 94 million carats.

Looking ahead this year, De Beers contended that rough diamond manufacturers, in India in particular, face continued pressures regarding levels of bank financing. In India, further volatility of the rupee may potentially affect rough diamond sales, according to De Beers.

On the retail side of the business, Anglo stated that diamond jewelry sales increased in all major markets in local currency terms. India was the exception as the country  faced challenging economic conditions and a devaluation of the rupee. Meanwhile, the U.S. posted improved sales and a ''generally strong'' Christmas. China continued to show positive growth rates, but at levels consistent with slower economic development, according to the mining giant.

De Beers reported that Forevermark polished sales were strong in 2013, without citing hard totals, and the number of doors increased 39 percent due primarily to expanding the brand  in the U.S., China, Japan and India. The brand is now available at more than 1,200 retail partners in 12 major markets. Since launching  Forevermark,  more than 870,000 diamonds have received the brand's inscription and unique identification number. Also during the year, De Beers Diamond Jewellers opened new directly operated stores in Shanghai and Hong Kong’s Times Square and through franchise partnerships, stores were opened in Kuala Lumpur, Baku, Vancouver and Kiev.

De Beers expects only a slight but steady improvement in growth for polished diamonds and diamond jewelry in 2014, with the U.S. and China being the main drivers.


 

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Tags: Anglo American, China, De Beers, diamonds, India, Jeff Miller, polished, prices, Production, rough
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