Gem Diamonds’ revenue for the ending 31 December 2019 declined by 32% to $182.0 million compared with $267.3 million, a year earlier.
This, said company chief executive Clifford Elphick, translated into underlying earnings before interest, tax, depreciation and amoritisation (EBITDA) of $41 million and earnings per share of 5.1 US cents compared to versus 22.9c in 2018.
Image credit: GEM DIAMONDS
“Although the group returned to a cash generative position in Q4 2019, cash flow from operations decreased 60% to $55.5 million during 2019, resulting in net debt at year-end of $10.2 million, compared to net cash of $17.5 million at the end of 2018,” he said.
Elphick said rough diamond prices were under severe pressure during 2019 with the over supply of most categories of rough and polished diamonds.
Events in Hong Kong affected turnout at the major trade shows for diamonds and credit provision to diamond manufacturers tightened considerably, reducing the ability of our direct customers to finance stock purchases, leading to a surplus of diamond stocks in the manufacturing sector, he said.
Meanwhile, Gem said it delivered “positive results” despite the challenging conditions, including the recovery of 11 diamonds greater than 100 carats compared to 15 in 2018.
These recoveries also brought the total number of diamonds of greater than 100 carats each to 100, since Gem Diamonds took ownership of Letšeng in July 2006.
Diamonds produced at Letšeng decreased by 10% to 113, 974 carats in 2019 compared with 126, 875 carats in 2018, mainly due to the planned limited contribution of the higher-grade, high-value Satellite pipe material during the year.
This, said the company, was the result of Letšeng transitioning into a new cutback within the pipe to accommodate future increases in contribution from this high-value pipe.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
