De Beers H1 revenue more than halves as Covid-19 continues to wreak havoc

De Beers’ revenue dropped by 54% to $1.2 billion in the first half of 2020 compared with $2.6 billion, a year earlier, according to Anglo American.
The group’s rough diamond sales eased to $1 billion from $2.3 billion recorded during the same period in 2019.
Rough diamond sales volumes also decreased by 45% to 8.5 million carats compared to the previous year’s 15.5 million carats.
The decline was attributed to the significant impact of Covid-19 on the global diamond industry.
“Consequently, De Beers offered Sightholders the option to defer up to 100% of their allocations at the fourth and fifth Sights and held some viewings for Sight 5 outside of Botswana, following the cancellation of the third Sight of 2020 due to Covid-19 related travel restrictions,” said Anglo.
The average realised price decreased by 21% to $119 per carat compared with $151 per carat in the first half of 2019.
The drop in average realised price was driven by a higher proportion of lower value rough diamonds being sold in the first two Sights of the year and an 8% decline in the average rough price index.
Anglo said De Beers’ underlying EBITDA decreased to $2 million from $518 million, a year earlier due to the impact of the considerably lower sales volumes and the lower rough price index reducing margins in both the mining and the trading businesses. 
Meanwhile, De Beers’ rough diamond production decreased by 27% to 11.3 million carats mainly due to the Covid-19 lockdowns in southern Africa. 
The group produced 15.6 million carats in the first half of 2019.
Anglo said mining operations restarted following the easing of regional lockdowns, with Covid-19 measures in place to safeguard the workforce.
However, production resumed at lower levels, reflecting reduced demand for rough diamonds as a consequence of the pandemic.
The group’s production guidance remained unchanged at between 25 million and 27 million carats, subject to continuous review based on the disruptions to operations as a result of Covid-19, as well as the timing and scale of the recovery in demand.
De Beers said the current market outlook is highly uncertain owing to the possibility of a second wave of Covid-19 infections, the ability of fiscal and monetary measures to continue to support employment and businesses in consumer countries, as well as the shape and strength of the global macro-economic recovery. 

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished