RAPAPORT... Harry Winston Diamond Corporation reported that fourth quarter sales rose 61 percent to $215.3 million and cost of sales rose 48 percent to $142.2 million for the period that ended January 31, 2011. Net earnings rose to $9.9 million from a reported loss of $3.4 million one year ago.
The mining segment experienced a rough sales increase of 30 percent to $82.7 million during the fourth quarter and the increase resulted primarily from a 23 percent jump in rough diamond prices. Rough diamond production during the calendar quarter from the Diavik diamond mine was 1.54 million carats, compared with 1.53 million carats one year ago.
Luxury brand segment sales for the fourth quarter increased 89 percent to $132.7 million.
Robert Gannicott, chairman of Harry Winston, stated, "This past year we have seen rapid growth in diamond demand, which has had a positive effect on both segments of our business. New customers in emerging markets, especially Asia, have replaced demand from the traditional markets such as America during the financial crisis. As recovery in America and development in the BRIC economies continues, the outlook for rough diamond prices, led by jewelry sales, is expected to be robust."
He continued, "Our operating earnings improved by $86 million versus the prior year as we swung decisively from loss to profitability on the back of strongly improved revenues."
Consolidated sales for the full fiscal year jumped 51 percent to $624 million. The mining segment experienced a rough diamond sales increase of 49 percent to $279.2 million. Harry Winston reported a rough diamond price increase of 62 percent while the volume of carats sold during the year dropped 8 percent. Rough diamond production for the calendar year 2010 was 6.5 million compared with 5.5 million carats one year ago.
Luxury brand segment sales, for fiscal year 2011, increased 53 percent to $344.8 million. The increase in sales resulted in earnings from operations for the year of $14.3 million compared with a loss from operations of $15.7 million in the prior year.
Harry Winston Diamond Corporation recorded consolidated net earnings attributable to shareholders of $21.7 million or 27-cents per share for the year, compared to consolidated net loss attributable to shareholders of $73.2 million or 99-cents per share in fiscal year 2010.
Gannicott added, "Although the commercial impact of the human tragedy in Japan has yet to be measured, we are thankful that our personnel and retail salons there are all unharmed. Last year Japan was 11 percent of global diamond jewelry consumer demand and 18 percent of our own luxury brand sales.
"For fiscal 2012 we expect a continued advance in luxury brand revenues and earnings driven by demand. Mining revenues will advance with higher diamond prices and improved ore mix. Mining costs will increase as open pit tonnage is supplemented by underground production, but to a lesser extent than originally expected due to the implementation of lower cost mining methods," he stated.