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De Beers 2001 Sales Decline 21.5 Percent to $4.5 Billion

Feb 17, 2002 9:09 PM   By Martin Rapaport
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Brief Financial Highlights from De Beers Press Conference this past Friday.

DTC sales came to $4.454 billion (-21.5% from last year). Other diamond sales that probably include the polished division, Diamdel’s open market dealing, and industrial diamonds came to $413 million (-1.7%). The cost of sales was $3.839 billion (-19.4%) indicating what looks like a gross diamond profit margin of 26.8%.

The net diamond account or net diamond profits came in at $886 million, 33% less than last year. Part of this decline is attributable to changes in bookkeeping caused by the privatization of De Beers. In any case the $886 million still provides for a net profit of 18.2% after sorting, marketing, exploration, research, amortization and other special costs.

“Own Earnings” or basically how much De Beers made before special income and other rather complex items came in at $642 million, 50% less than last year. While the press may be broadcasting the 50% decline as an indicator that the diamond business is weak, the $642 million figure is artificially low due to a number of one time charges related to De Beers privatization.

The bottom line is not to worry, De Beers is doing fine. In fact, in spite of their leveraged buyout deal that removed De Beers asset base and resulted in a one to one, debt to asset ratio, De Beers is probably doing better than anyone else in the diamond industry.

Tags: De Beers, Diamdel, DTC
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