De Beers 1H Sales -54%, Profits -99%

[formercia]

Source: diamonds.net

http://www.diamonds.net/news/NewsItem.aspx?ArticleID=27267

De Beers 1H Sales -54%, Profits -99%

By Jeff Miller Posted: 07/24/09 05:06
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RAPAPORT... De Beers Group's sales for the first half of 2009 fell 54 percent to $1.7 billion. The company reported net earnings of $3 million, which was a drop of 99 percent. De Beers registered underlying losses — i.e., operating losses — of $164 million, compared with underlying earnings of $350 million one year ago. First-half sales for the Diamond Trading Company (DTC) were down 57 percent to $1.4 billion. De Beers noted the sales decline was "due to reduced purchases by sightholders as they worked to reduce inventory levels and increase liquidity in the face of the global economic downturn."

Production fell 73 percent to 6.6 million carats as many mining operations were placed on care and maintenance during the first quarter. Subsequently, though, all except one mine have resumed operations, according to De Beers. For the full year, De Beers predicts production will be half that of 2008.

De Beers reduced costs by more than 50 percent in the first half, realizing $612 million in savings and reducing capital expenses by $241 million. Shareholders provided $500 million in additional subordinated loan funding, brining total loans to $817 million before International Financial Reporting Standards (IFRS) interest adjustments. The company stated that it is working with banks to renew a $1.5 billion term loan, which expires in March 2010. Net debt as of June 2009 was at $4.1 billion, up from $3.8 billion in December.

Read more: http://www.diamonds.net/news/NewsItem.aspx?ArticleID=27267

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Even the rich aren't spending.

[rurallib]

1. probably the last company I would have sympathy for.

[formercia]

2. I feel the same way

Schadenfreude

[HamdenRice]

17. I'm very sympathetic and saddened. This is bad for developing countries, South Africa and Botswana

You might take a look at the subthread below. De Beers isn't the apartheid era company it was when it's image was formed.

[JI7]

21. they are still overpriced , they could sell them for less money

and still make a lot of money because more people would buy more of it if it cost less.

[rurallib]

23. It is always good to learn something. Thank you.

[madinmaryland]

3. Fuck DeBeers. I hope those raping bastards go out of business and are

thrown in jail.

FUCK THEM!

[Betsy Ross]

4. Ooooh! What if they had to sell all those diamonds

for their actual value? On edit: Their mineral value, not the inflated jewelry price. DeBeers controls the market and price.

[Botany]

8. actual value

a nice diamond that retails now from 1,000.00 to 1,500.00 would go for about
$75.00.

Diamonds are very common but Debeers has been screwing people for years.

Hell, they vacuum 'em off the sea floor off the coast of S. Africa and both Russia and Australia have shit loads
of 'em .... Debeers buys in bulk to keep the price high.

[MUAD_DIB]

10. Do they use a wet vac?

[svpadgham]

12. That made me laugh.

n/t

[FarCenter]

15. Plus they can make artificial diamonds with gem quality now

Same face-centered, cubic carbon crystals.

[formercia]

19. Fancy colors too.

DeBeers is like the GOP. They try to convince you that flaws are a good thing.

[create.peace]

5. finally some good news.....nt

[sakabatou]

6. No one can afford expenses like that

[Shagbark Hickory]

7. Don't you hate it when you have a bad year and only make $3 million dollaz? That must suck.

[tomm2thumbs]

9. which means they are only making a gadzillion dollars instead of a five gadzillion

on rocks

(sigh)

[frylock]

11. good

[buckrogers1965]

13. It would be great if they failed.

And the market opened up to real competition. Diamond prices would drop to 1/100th what they are now.

[Speciesamused]

14. Blood Diamonds....

I hope De Beers drowns in the muck pits
they make men and children work in for pennies.
I own no diamonds and never will. They are a
product of human misery.

[HamdenRice]

22. DeBeers actually is a major force against blood diamonds

Remember that DeBeers' strategy has always been to maintain a monopoly of production and sale of diamonds. Blood diamonds from west Africa threatened that monopoly. Moreover, the bad publicity of blood diamonds were beginning to hurt sales.

So South Africa, Namibia, Botswana and DeBeers, got together to create the system for certifying that diamonds are not blood diamonds and that blood diamonds would be excluded from the distribution chain. At the end of the movie, Blood Diamond, where the main character is addressing a group of people at Kimberely, South Africa, that was the conference that South Africa and DeBeers called to institute the Kimberely Process Certification Scheme.

[imdjh]

16. Surprising ownership at deBeers - joint ventures with Botswana, Namibia, Ponahalo

Mining in Botswana takes place through the mining company Debswana,<11>a 50-50 joint venture with the Government of the Republic of Botswana. In Namibia it takes place through Namdeb,<12> a 50-50 joint venture with the Government of the Republic of Namibia. Mining in South Africa takes place through De Beers Consolidated Mines (DBCM),<13> 74% owned by DeBeers and 26% by a broad based black economic empowerment partner, Ponahalo Investments. In 2007 De Beers began production at the Snap Lake Mine in Northwest Territories, Canada;<14> this is the first De Beers mine outside of Africa. In July 2008 De Beers opened the Victor Mine in Ontario, Canada.<15>
Trading of rough diamonds takes place through the Diamond Trading Company through wholly-owned and joint venture operations in South Africa (DTCSA), Botswana (DTCB), Namibia (NDTC) and the United Kingdom (DTC). The various DTCs sort, value and sell approximately 40%<16> of the world’s rough diamonds by value.
The Family of Companies employs about 20,000 people around the world on five continents, with 17,000 employees in Africa. Over 7000 people are employed in Botswana, over 7100 in South Africa, 3800 in Namibia, 700 in Canada and over 800 in Group Exploration.<17>

[HamdenRice]

18. Thanks for pointing this out. DeBeers is not the apartheid era company many think it is.

DeBeers has helped Botswana accumulate massive currency reserves, which it uses for development and HIV treatment and prevention. Botswana, the country portrayed in Ladies No 1 Detective Agency, is one of the least corrupt, best run countries in Africa and has used its partnership with DeBeers very wisely over the years.

DeBeers monopolization of diamonds would not be permitted in most countries as an anti-competitive cartel. But it was exactly that monopoly that enabled DeBeers to agree to create a comprehensive program of "sourcing" all African diamonds as a major step for eliminating the market for blood diamonds. Of course, it was in their self interest as well, because it maintained their monopoly and prices, but arguably, they helped dry up funding for the carnage in Liberia and Sierra Leone.

DeBeers also threw its support behind the ANC and a negotiated end to apartheid in the early 1990s.

Right now because of the economic downturn in South Africa, there are street demonstrations and riots that are beginning to rival the anti-apartheid uprisings.

So while it may be satisfying to think of DeBeers as "getting theirs", it's not the same company it was back in the bad old days, and South Africa, Namibia and Botswana rely on DeBeers for export earnings.

[HamdenRice]

24. One more wrinkle I forgot to add

Botswana earned royalties from DeBeers diamond mines in their country. Rather than spend that revenue (let alone siphon it off through corruption, which is rare in Botswana), Botswana reinvested a lot of it into DeBeers.

By the mid 1980s, long before apartheid ended, Botswana was a major shareholder in DeBeers. In recent years, Botswana has been the third largest shareholder in DeBeers operating companies in South Africa -- how ironic, that the poor neighbor ended up buying one of the biggest corporations in S. Africa -- and Botswana generally owns DeBeers mines in Botswana itself on a 50/50 basis.

This slump is not good for Botswana.

[slackmaster]

20. I feel so sorry for them

:nopity: