De Beers 2015 Revenue Slumps 34%
February 17, 16
(IDEX Online News) – Further evidence of the difficulties affecting the diamond industry in 2015 was apparent as De Beers announced that its 2015 revenue had declined 34 percent.
The $4.7 billion revenue total compared unfavorably to the $7.1 billion the company made in 2014. Production declined to 28.7 million carats, a 12-percent reduction on the 32.14 million carats produced in 2014, as a consequence of prevailing trading conditions. De Beers’ projected that it would produce 26-28 million carats in 2016, but that this would be subject to market demand.
Other financial markers also pointed to the challenges De Beers faced in 2015. The company’s underlying EBIT slumped 58 percent to $571 million compared to $1.36 billion a year previously. Consolidated diamond sales also suffered, registering a 39-percent reduction to 19.9 million carats compared to 32.7 million carats in 2014.
Amid the negative results, the company announced that the average realized diamond price increased 5 percent from $198 per carat in 2014 to $207 per carat in 2015. De Beers said that “lower rough diamond sales volume and weaker price index, was partly offset by a richer product mix.”
According to De Beers, global consumer demand for diamond jewelry is expected to have declined marginally in 2015 from the record levels of 2014 – with growth in the US partly offset by the strong dollar and continued volatility in China.
“The US, the largest market for polished diamonds at approximately 45 percent of global market value, again saw the strongest growth, albeit at a slower rate than in 2014. Demand for diamond jewelry by Chinese consumers was stable, while in India, diamond jewellery demand contracted in local currency terms,” according to the company’s year-end report.
It also said that weaker than expected consumer demand led to retailers reducing their own demand for polished diamonds from the midstream manufacturers, which in turn created a build-up in polished stocks in the midstream and suppressed polished prices.
De Beers’ in-house diamond brand, Forevermark, expanded its growth in 2015, both in terms of the number of outlets at which it is available, 1,760 – a rise of 14 percent – and that it achieved a double-digit sales improvement.