De Beers '05 Diamond Sales $7.052 Billion

Diamond Trading Company (DTC) sales last year were a record $6.539 billion; 15 percent higher than in 2004. The net income from diamonds was $1.186 billion, a 2.7 percent increase over $1.155 billion in 2004. Diamond production by the group, including joint ventures, was 49 million carats, an increase of 4 percent over 2004. U.S. Christmas retail sales were "satisfactory".

With another $513 million in polished diamond sales, lab made industrial diamonds by Element Six and rough diamond sales by Diamdel, diamond sales totaled $7.052 billion. Diamdel sales were only a small portion of the above figure, including only rough not sourced from the DTC.

Combined DTC and Diamdel diamond sales stood at an average of $143.92 per carat, $11.86, or 9 percent, more than the average per carat price of $132.06 in 2004. The DTC raised prices twice during the year, leading to prices that were, on average, 9.5 percent higher than in 2004.

De Beers Group net earnings in 2005 were $554 million, an 11.2 percent rise over the previous year.

Operating cash flow fell to $723 million, before the payment of $250 million in a class action settlement agreement, from $985 million in 2004. The fall was mainly due to an increase in working capital requirements during 2005.

Mining operations, including joint ventures in Namibia and Botswana, produced 49 million carats, a 4 percent increase over the same prior year period. Debswana produced a record 31.9 million carats, an increase of 2 percent. Namdeb’s production of 1.8 million carats was 5 percent lower than in 2004.  De Beers’ South African mines produced a total of 15.2 million carats, an increase of 1.4 million carats (10 percent) over 2004.

De Beers Consolidated Mines initiated and completed the closure of its loss-making underground operations in Kimberley and Koffiefontein; resulting in impairments and provisions for retrenchments amounting to $48 million. De Beers have implemented re-skilling programs for employees who lost their jobs.

Initial reports of retail sales of diamond jewelry indicate growth of about 6 – 7 percent. "Regional analysis indicates growth in all areas with the exception of Europe. The US had a satisfactory Christmas with overall annual growth in line with the world trend," the company said in a release this morning.

While high-end independents and internet retailers outperformed the market, Japan and the rest of Asia-Pacific grew in low single digits, with China performing better after the poor first half of the year.

Double-digit growth was noted in the Asia-Arabia region.

"Demand for rough diamonds continues to be steady," the company said in its outlook for 2006. "However, stocks of both rough and polished in the cutting centers were relatively high at the beginning of the new year as were aggregate debt levels. As a result, DTC clients were happy to see a relatively modest January Sight, preferring to spread their ITO (Intention to Offer) allocation much more evenly over the first half. However, the 2006 outlook remains positive, with market growth expected to be similar to 2005 in line with expectations for global economic growth."