Price growth of an estimated 35 percent contributed to De Beers' Diamond Trading Company (DTC) achieving a 33 percent increase in its rough diamond sales during the first six months of 2011, which totaled US$3.5 billion, the "highest ever" sales figure recorded for the first half of the year. According to the company's interim results, rough sales were "buoyed by continued retail demand from the Indian and Chinese consumer markets and stronger than expected demand in America."
The "excellent" price growth in the January to June 2011 period also contributed to De Beers' record EBITDA of almost US$1.2 billion, a 55 percent increase over the corresponding period in 2010.
The company recorded a free cash flow of US$469 million, a reduction of 24 percent compared to last year due to the timing of stock purchases in the current period compared to 2010.
De Beers recovered 15.53 million carats from its diamond mines, slightly more than the 15.43 million carats in the first half of 2010, reflecting the impact of maintenance and asset management difficulties and, to an extent, excessive rainfall in southern Africa.
De Beers Consolidated Mines (DBCM) produced 2.8 million carats while Debswana produced 11.3 million carats. Diamonds recovered at De Beers Canada totaled 817,000 carats and Namdeb's carat production was 599,000 carats.
De Beers notes that DBCM completed its asset disposal program during the first six months of the year, with its agreements to sell Finsch Mine as a going concern to Petra Diamonds and Namaqualand Mines to Trans Hex.
During the first half of 2011, De Beers diamond brand Forevermark continued its expansion into the core retail markets of China, Hong Kong and Japan, and recently launched in India, Singapore and the Caribbean. The Forevermark brand is now available from a small number of stores in the U.S., with further expansion planned later this year, notes De Beers.
During the six-month period, De Beers Diamond Jewellers, De Beers' joint venture with LVMH, announced the strategic launch of the brand in China with the opening of its first mainland store in Beijing, its first store in Almaty, Kazakhstan, and a new store in Dubai. The company will continue its expansion in 2011 with the opening of further stores in mainland China and a second store in Hong Kong.
"Despite the ongoing turmoil with the global economy, we are encouraged by the continued strong growth in price and demand during the first six months of 2011. De Beers is confident that the exceptional growth in retail markets in India and Asia will continue to drive demand for diamonds. Reports from the recent JCK trade show indicate that the all-important Christmas season in the US, and Diwali, are set to be strong," notes the company.
To read the De Beers H1 2011 Results in their entirety, click the image below: