De Beers’ sale up 53% in 2010

De Beers has announced its financial results for 2010, with stark improvements in demand and prices, over year 2009, bringing it ‘from stabilisation to strong recovery’. DTC’s rough diamond prices rose by an average of 27 per cent the year to levels which are above those which prevailed prior to the onset of the economic crisis, ‘as confidence returned to most parts of the diamond pipeline”, attributed to restocking and a rebound in consumer demand, ‘as evidenced by the extraordinary growth in China and India and the better than expected retail performance in the US during the Christmas buying period’. Overall sales at the De Beers Group stood at US$5.88 billion, a 53 percent jump over sales of 2009, while rough diamond sales by the DTC stood at US$5.08 billion from US$3.23 billion in 2009.

While prices moved up, the company is maintaining vigilance that “the industry is not back to pre-recessionary levels in terms of production or sales and a high degree of global uncertainty remains”.

Total production from its wholly-owned and joint venture operations in Botswana, South Africa, Namibia and Canada was up 34 per cent to 33 million carats in 2010 from 24.6 million carats in 2009. De Beers also went headlong in expanding its global retail initiative of its diamond brand ‘Forevermark’ throughout Asia in 2010, with a reach that has increased by 40 percent on the beginning of 2009.

The mining giant maintained a vigilant control over cost efficiency and cash management. EBITDA grew to US$1.43 billion, an increase of 118 per cent over 2009 (US$654 million). Its free cash flow stood at US$943 million (2009: US$35 million). Shareholder subscription worth US$1 billion towards additional equity allowed the Group to complete refinancing of all of its international and South African debt on satisfactory terms. The tenors of all facilities have been extended to August 2013. Its third party (non shareholder) debt was US$1.76 billion from US$3.20 billion in 2009, and gearing on this debt, excluding US$790 million in shareholder loans, was 29.5 per cent (December 2009: 52.2 per cent).

In the times ahead, the company opines that a recovering economy and retail confidence would drive consumer demand through this year. It is optimistic about the U.S. markets enjoying similar retail success as 2010 Christmas retail season, and demand by India and China would be sustained. It is targeting a total production of 38 million carats in 2011, and to reach full production by 2012.