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De Beers Operating Profit Vaults 112%

The diamond miner and seller credited higher revenues, cost controls and favorable currency movements.

LONDON — Operating profit at De Beers, the diamond miner and seller, rose 112 percent to just over $1 billion in the 2013 fiscal year, boosted by higher revenues, tight cost controls, and favorable exchange rate movements, according to the company’s parent Anglo-American plc, a publicly listed company.

The parent company said sales increased 5 percent to $6.4 billion in the twelve-month period. De Beers’ rough diamond price index increased 2 percent, while average, realized rough diamond prices were 5 percent higher.

Anglo-American said that in 2013, despite global macro-economic uncertainty, diamond jewelry sales increased in local currency terms in all major diamond markets, except India.
 
“In India, challenging economic conditions and a devaluation of the rupee resulted in a decline in demand,” the company said. “The U.S. market posted positive growth, with a generally strong holiday season in the fourth quarter. China continued to show positive growth rates, but at levels consistent with slower economic development.”

The company said that Forevermark, its diamond brand, saw strong growth in 2013, with door numbers up by 39 percent compared with the previous year. This growth was driven primarily by the core markets of the U.S., China, Japan and India, the company said.

The Forevermark brand, which offers ethically sourced diamonds with a unique identification number, is sold through 1,200 retailers in 12 markets. De Beers Diamond Jewellers, a retail joint venture with LVMH Moet Hennessy Louis Vuitton, opened directly operated stores in Shanghai and Hong Kong’s Times Square and franchises in Kuala Lumpur, Baku, Vancouver and Kiev.

In the statement, Anglo-American said it expects De Beers to see a “slight strengthening” in growth of diamond jewelry demand this year, driven by continued gradual improvements in the global economic outlook.

“The U.S. and China are expected to continue to be the main engines of growth for polished diamonds, while most other markets are expected to show positive growth in local currency,” the company said.

“Rough diamond manufacturers, in India in particular, face continued pressures regarding levels of bank financing. In India, further volatility of the rupee may potentially affect rough diamond sales. In the medium to long term, industry fundamentals are expected to strengthen as diamond production plateaus and demand continues to increase,” it added.