De Beers Reduces Diamond Production

De Beers is addressing the slowdown in demand for diamonds by reducing its production levels.

LONDON — De Beers SA said it expects diamond retailers worldwide to reduce their inventory levels in the first half of 2009.

This story first appeared in the February 23, 2009 issue of WWD.  Subscribe Today.

As a result, De Beers has already begun offering fewer rough diamonds to its wholesale clients during its monthly sales.

Gareth Penny, group managing director at De Beers, said Friday in a Webcast for the firm’s 2008 earnings report that the diamond company was reducing its production levels and slashing capital expenditures in anticipation of a further downturn in demand this year.

“We believe these decisions will sustain the business in 2009,” he said, adding these were “extraordinary times.”

As reported, De Beers is also mulling selling surplus stock to the secondary market.

On Friday, De Beers SA said fourth-quarter sales for the fiscal year ended Dec. 31 had slowed “significantly” after nine months of buoyant growth. Total sales for the year rose 1.5 percent to $6.9 billion from $6.8 billion, while net profit was $90 million, compared with a loss of $521 million last year due to one-off items.