De Beers expects dull year for diamonds despite sales increase of 27%
Diamond demand will slow down significantly in 2012 said today De Beers SA, the world’s largest supplier of rough diamonds, due largely to the weak global economy.
The diamond giant reported an increase in its full year 2011 earnings despite a grim second half, hit by an overall drop in prices and lower consumer demand in India. Its rough diamond sales rose 27 per cent in 2011, with earnings up 21 per cent.
Gross earnings totaled $1.7 billion. Underlying earnings rose 62 percent, or by $968 million, for total sales of $7.38 billion.
Last year, diamond prices rose 29 per cent and demand grew by more than 11 per cent, but De Beers said this price and consumption growth it is not likely to be repeated in 2012.
“I don’t believe we will see a major crash, but there is certainly a lot of uncertainty,” said Chief Executive Philippe Mellier, while delivering his first set of annual results since being appointed last July.
“On the other hand, all luxury goods appear to be holding very well, and as a result the luxury goods companies are showing there is still strong demand,” he added.
This was the company’s first report since Anglo American plc (LON:AAL) increased its interested in De Beers from 45% to 85% by buying out the Oppenheimer family for US$5.1 billion.