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Gem Diamonds 1H Revenue -8%
Aug 21, 2012 2:57 AM
By Avi Krawitz
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RAPAPORT... Gem Diamonds reported revenue fell 8 percent year on year to $180.2 million in the first half of 2012 as rough diamond demand softened. Net profit slumped 51 percent to $24.9 million for the period.
The mining company noted that reduced liquidity and a decline in emerging market demand for rough diamonds during the second quarter created especially challenging trading conditions, which led to higher polished and rough inventory levels in the manufacturing centers.
Gem Diamonds reported that prices fell 30 percent in the fourth quarter of 2011 but they stabilized during the first three months of 2012 before starting to noticeable decline again in May. Steeper price declines were observed for smaller, lower-quality production, while prices for the larger, high-end goods were mostly unaffected during the period.
Gem Diamonds reported earlier that the average price of diamonds sold from its Letšeng mine in Lesotho fell 30 percent to $2,133 per carat. The average price of commercial production from its Ellendale mine in Australia decreased 8 percent to $180 per carat, while Ellendale’s fancy yellow diamonds that the company sells to Tiffany & Co. experienced an average price increase of 7 percent to $4,045 per carat.
Letseng's production rose 8 percent to 57,116 carats during the first half, while the volume of sales grew 12 percent to 58,725 carats. Production at Ellendale increased 51 percent to 78,881 carats and sales rose 29 percent to 74,580 carats.
Due to the weak economic conditions and the resulting drop in rough prices, the company has delayed its Letšeng expansion project and development of its Gaghoo mine in Botswana.
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Tags:
Avi Krawitz, diamonds, Ellendale, Gem Diamonds, Letseng, Rapaport, Tiffany
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