Vancouver — A slowing U.S. economy has resulted in a 26% drop in rough diamond sales for Diamond Trading Company Limited (DTC), the marketing arm of De Beers Consolidated Mines (DBRSY-Q).
The company, which controls 65% of the world’s trade in uncut stones, posted sales of US$2.62 billion during the first half of 2001, compared with a record US$3.5 billion in the first half of 2000. The drop was a result of a global economic slowdown, especially in the U.S. jewelry market.
Christmas sales of diamond jewelry were well below expectations and led to excess inventory of polished diamonds. Consequently, the U.S. retail sector, which accounts for almost 50% of international diamond jewelry sales, did not restock. Prices in certain categories were under pressure, extended credit terms were demanded, liquidity was tight and profitability was reduced.
De Beers expects the slowdown to be short-lived.
“The DTC anticipates that the market should begin to show signs of improvement in the second half, though much will depend on the extent of any recovery in economic growth, the further reduction in inventory levels and the relative strength of the U.S. dollar against other diamond consumer market currencies,” the company says.
Sales in Europe showed modest increases. The retail market in Japan remained weak.
De Beers was bought out and made private last month after shareholders approved a US$19-billion bid from a consortium led by mining giant Anglo American (AAUK-Q) and the South African Oppenheimer family.
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