Diamond giant De Beers Group has reported its worst earnings since 2009 as the global economic slowdown takes its toll
The corporation’s profits fell by 50 per cent in 2019 to $558m (£431m, €516m), far below its modern-day peak of $1.8bn in 2014.
De Beers CEO Bruce Cleaver defended his firm saying: “I’m actually very proud about what De Beers did in 2019. It was not an easy year. We led an industry. We spent a lot of time speaking to customers, to bankers and to retailers to give them confidence that De Beers thinks there’s a great future here.”
While the group has endeavoured to innovate, accelerating the adoption of blockchain technology in diamond tracking for instance, it is clearly enduring some difficulty.
In the past year the group has broken from its own precedent and granted customers greater flexibility, even cutting its prices. With the customer base for diamond jewellery remaining strong in 2019, the recent fall in profits is more an issue with the group’s supply chain. Indeed, an oversupply of diamonds has put pressure on the middlemen on whom De Beers relies to prepare the gems for retail purchase.
Founded in 1888 by Cecil Rhodes, De Beers had a practical monopoly over the diamond market throughout the 20th century. However, after its grip loosened at the turn of the millennium the firm has undergone wide-scale change. British mining giant Anglo American took control of De Beers in 2011, buying out the longstanding Oppenheimer family for $5.1bn.
Mark Cutifani, Anglo-American’s CEO, argued that there are signs that the diamond business will improve in the next year but recognised the immediate devastation caused by the coronavirus epidemic: “There aren't as many people walking around jewellery shops in China. In Hong Kong, there are virtually none. It'll be a couple of months before we have a better picture."
Anglo American’s share price fell following the Thursday announcement. The group’s share price has nonetheless gained steadily since its five-year low in January 2016, helped in part by more than $1bn of buybacks. In early-afternoon Friday trading it stands at 2,120.00 pence, down 0.12 per cent.