De Beer’s underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) decreased by 55% to $558 million in 2019 compared with $1,2 billion, a year earlier due to lower sales volumes, a lower value sales mix which curtailed mining margins.
The group’s revenue eased by 24% to $4.6 billion compared with $6.1 billion in 2018 as rough diamond sales fell by 26% to $4 billion from $5.4 billion, a year earlier.
It said the decline was due to an 8% decrease in consolidated rough diamond sales volumes to 29.2 million carats against 31.7 million carats realised in 2018 and a 20% reduction in average realised price to $137 per carat from $171 per carat in the corresponding period.
“The reduction in realised price was driven by a 6% decline in the average rough price index and from a lower value mix of diamonds sold, in response to the weaker demand for higher value diamonds,” said De Beers.
The group also said that in response to the challenging midstream trading environment, it offered increased supply flexibility to sightholders and sold lower value and volume of rough diamonds to the midstream, while increasing marketing expenditure to $178 million from $166 million in 2018 to further drive consumer demand for diamond jewellery.
Its rough diamond production fell by 13% to 30.8 million carats from 35.3 million carats in 2018, primarily driven by a reduction in South Africa.
“While trading conditions have improved somewhat since the third quarter of the year, production was lower in response to softer rough diamond demand conditions compared with 2018,” it said.
The group’s 2020 production guidance was between 32 and 34 million carats, subject to trading conditions.
The higher production will be driven by an expected increase in ore from the final open-pit cut at Venetia, supported by a currently anticipated improvement in trading conditions compared with 2019.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
Source: Rough Polished 25-2-2020
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