LONDON — Net earnings at De Beers, the diamond mining and marketing company, soared 26.3 percent to $341 million from $270 million in the first half of the year, to June 30, as retail demand for diamond jewelry remained strong.

“It is — and will continue to be — a good year for consumer demand, although we’d be happier if the financial markets overall weren’t moving downward,” Gary Ralfe, managing director of De Beers, said during a conference call on Friday to discuss the results.

De Beers’ crucial period for sales is the current half, when the bulk of diamond jewelry is purchased. For example, 40 percent of all diamond purchases in the U.S. are made between Thanksgiving and Christmas.

Total sales for the half rose 7 percent to $3.62 billion from $3.38 billion. Sales at the Diamond Trading Company, the marketing arm of De Beers, which generates the lion’s share of revenue, rose 2.2 percent to $2.98 billion from $2.92 billion.

All figures were reported in dollars by De Beers Société Anonyme, a Luxembourg-based private company.

De Beers said in a statement that strong demand at retail in the first half translated into increased demand for polished diamonds from the cutting centers.

As a result, stocks of polished diamonds have been declining, and the DTC was forced to raise its rough diamond prices twice over the past six months. The DTC’s rough diamond prices for the first half were, on average, 14 percent higher than the corresponding period last year.

Meanwhile, De Beers said its older, more marginal mines in South Africa “continue to struggle” in the current environment, and every effort is being made to seek further efficiencies and cost reductions.

In addition, other mines, such as Jwaneng in Botswana, were under budget by 19 to 20 percent, but they are expected to be closer to parity by the end of this year. De Beers said the sluggish production was due mostly to technical and mechanical problems.

“In the second half, I hope we can claw back market share with regard to production at the mines,” Ralfe added.

This story first appeared in the July 26, 2004 issue of WWD. Subscribe Today.

Jon Bergtheil, head of European mining stocks at J.P. Morgan in London, said De Beers is falling behind in its diamond mining.

“They had set targets for levels of production, and they are way behind,” he said. “If they want to be more than a clearinghouse for rough diamonds, then they must maintain their proper percentage of global production.”

Meanwhile, Ralfe also commented on De Beers LV, the jewelry joint venture between the diamond company and LVMH Moët Hennessy Louis Vuitton. “The joint venture got off to a slow start in the first 18 months. However, during the past six months, both the Bond Street unit and the stores in Japan have seen a pleasing level of growth. The Bond Street store in particular has seen its business double year-on-year. The business model is being consistently refined, and we want to get it absolutely right before we open in New York in 2005.”

Ralfe, chairman of the board of De Beers LV in addition to his managing director’s title at De Beers, declined to give any numbers regarding the business.

Nicky Oppenheimer, chairman of De Beers, said the joint venture partners have pledged to invest a total of $400 million in the project. De Beers LV has a flagship on London’s Piccadilly, as well as three stores in Japan. It will open its first U.S. unit on Fifth Avenue and 55th Street next year. That opening will be followed by a store on Rodeo Drive in Los Angeles in the former Fred location.