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Rio Tinto Diamond Revenue -23% to $331M in 1H
Aug 6, 2015 5:58 AM
By Ronen Shnidman
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RAPAPORT... Rio Tinto reported mixed results for its diamond operations in its first half report released on Thursday, with the effect of softening demand for rough diamonds offset by a strengthening dollar.
Diamond operations’ revenue slumped 23 percent year on year to $331 million during the first half that ended June 30, 2015, its parent company reported. However, net underlying earnings surged 72 percent to $31 million, as local currencies weakened against the dollar, the currency in which rough diamonds are traded. Net underlying earnings denotes an operational unit’s contribution to the overall group’s net earnings.
Rio Tinto had three operating diamonds mines during the period, the fully-owned Argyle mine in Australia, the 60 percent-owned Diavik mine in Canada and the 77.8 percent-owned Murowa mine in Zimbabwe. Rio Tinto sold its 77.8 percent interest in Murowa on June 26, 2015, after which it no longer contributed to the group’s reported revenue and production figures.
The company attributed the drop in revenue to lower rough diamond prices driven by lower demand from India and China, high rough and polished diamond inventory among diamond manufacturers and retailers and very low profit margins among diamond polishers and cutters.
Rio Tinto reported in July that its diamond production increased 18 percent to 8.851 million carats during the first half. In its latest financial statement, Rio Tinto's management reiterated its previous guidance that it intended to increase its rough diamond production by 45 percent to 20 million carats in 2015.
Rio Tinto Diamonds outperformed the larger Rio Tinto group during the first six months of the period, which saw consolidated revenue decline 26 percent to $18 billion and underlying earnings slump 43 percent to $2.9 billion. Net earnings plummeted 82 percent to $806 million during the period.
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Tags:
Argyle, Diavik, Murowa, Rio Tinto, Rio Tinto Diamonds, Ronen Shnidman, rough prices
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