De Beers To Make Profit in 2009 Despite The Recession

Despite the weak demand and falling prices of rough diamonds this year De Beers is expecting to make a profit. According to rapaport news De Beers is hoping to cut $1.5 billion in operational and capital costs which would help their bottom line. De Beers also scaled down its production of rough diamonds by 91% in the first quarter of 2009. The company’s cost cutting measure included dismissing around some 300 jobs in the London office.

David Prager the De Beers Director of communications told reuters in a telephone interview that they have seen signs of recovery in the market, the first half was really tough. “The company will be profitable this year and obviously that’s critically important”.

“We expect to see in the second half a further return in demand, and then moving into 2010, more of a return to normal trading conditions. All the signs point to a progressive recovery.”

Mr Prager also noted that people are delaying purchasing engagement and wedding rings and not cancelling their purchases.

There is also an increase in the total turnover in their “sights”-a periodic sales events to the sightholders. The total turnover at the sights in April, May and June was triple the level of those in December, January and February.

The increased demand has resulted in an increase in the output, their mines in Botswana is back in production and this month the Namibian mines have restarted production.

The total revenue in rough diamonds this year is expected to be around $3 billion, a fall of about 50% of the revenue in 2008.

The June 2009 sale is expected to be worth about $425 million which is 70% higher than the May sight. The sixth DTC sight of 2009 is to run from July 13th to 17th.

This year’s Christmas season is also expected to be much better than last year’s.

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