De Beers flags fall in sales, uncertain year ahead
LONDON (AFP) — De Beers, the world's biggest diamond company, said Friday its 2007 sales fell three percent to 6.84 billion dollars (4.71 billion euros) and flagged a "high level of uncertainty" about its business this year.
The company, which claims 40 percent of the world diamond market, said underlying net profit rose 14 percent to 483 million dollars.
But because it was taking an exceptional depreciation charge of 965 million dollars for its Canadian operations, that profit became a loss of 521 million dollars, De Beers said.
Despite the Canadian charges, the company said it remained confident about its business there.
Total investment rose 18 percent to 1.12 billion dollars while output, at 51.1 million carats, mostly from Botswana, was little changed.
"The outlook for 2008 is tempered by a high level of uncertainty over world market conditions," de Beers said in a statement.
"The economic conditions in the US could continue to impact consumer diamond jewellery sales through the first half, particularly at the lower end. Nevertheless, we expect strong demand from China, India and the Middle East to sustain pricing for larger and better quality diamonds."
De Beers said it expected a similar performance this year but noted that power shortages in South Africa, which hit mining recently, could hit output there.
Speaking to reporters in the Botswanan capital Gaborone, group chairman Nicky Oppenheimer said the power problems which have affected large parts of southern Africa could lead to a downturn of over 10 percent if not addressed.
"Early indications are that even if the power supply is maintained at 90 percent levels there will be an impact on the overall group," said Oppenheimer.
"However below this level, the impact will be significant and could be in excess of 10 percent," Oppenheimer added.
