RAPAPORT... De Beers Group's sales for the first half of 2009 fell 54
percent to $1.7 billion. The company reported net earnings of $3 million,
which was a drop of 99 percent. De Beers registered underlying losses —
i.e., operating losses — of $164 million, compared with underlying
earnings of $350 million one year ago. First-half sales for the Diamond
Trading Company (DTC) were down 57 percent to $1.4 billion. De Beers
noted the sales decline was "due to reduced purchases by sightholders as
they worked to reduce inventory levels and increase liquidity in the face
of the global economic downturn."
Production fell 73 percent to 6.6 million carats as many mining operations
were placed on care and maintenance during the first quarter.
Subsequently, though, all except one mine have resumed operations,
according to De Beers. For the full year, De Beers predicts production
will be half that of 2008.
De Beers reduced costs by more than 50 percent in the first half,
realizing $612 million in savings and reducing capital expenses by $241
million. Shareholders provided $500 million in additional subordinated
loan funding, brining total loans to $817 million before International
Financial Reporting Standards (IFRS) interest adjustments. The company
stated that it is working with banks to renew a $1.5 billion term loan,
which expires in March 2010. Net debt as of June 2009 was at $4.1 billion,
up from $3.8 billion in December.