De Beers forecasts healthy growth in demand for diamonds and diamond jewelry in 2018, particularly in the United States, CEO Bruce Cleaver tells JCK.
Cleaver made the comments in an interview following the release of its preliminary financial results. The results were published as part of the balance sheet of Anglo American, which owns 85 percent of the company.
“The holiday season in America was a little better than we thought it would be,” he says. “A weakened dollar should be good for demand, at least outside America. The Chinese New Year seems like it was good.”
He adds that he is finding current sentiment in the trade “quite good.”
However, he admits that the current bank scandals in India have unsettled the market. One of the companies named in the episode, Gitanjali Gems, is currently listed as a De Beers client.
“We are taking appropriate steps there,” he says.
A few years back, De Beers introduced new financial transparency criteria for its clients. Cleaver says this latest episode illustrates why that is important.
“This is no longer a nice-to-have,” he says. “We will continue to work with the banks to make sure they are comfortable with our selection criteria.”
Overall, the company posted a generally solid set of financial results.
Total revenue for the year declined 4 percent to $5.8 billion, from $6.1 billion in 2016. A statement said 2016’s results were goosed by one-off midstream restocking during the first half of the year.
However, underlying EBITDA (earnings before interest, taxes, depreciation, and amortization) increased 2 percent to $1.435 billion, from $1.406 the prior year.
“It was operationally a good performance,” he says. “You have to mine the diamonds and mine them efficiently. We are pleased that underlying EBITDA was up even though revenue was down.”
De Beers invested $140 million in marketing in 2017, a 19 percent increase from the year before.
Cleaver also said that De Beers and Anglo will move back to De Beers’ longtime home on Charterhouse Street in 2020 after that facility is revamped. De Beers left the building in 2016.
(Image courtesy of De Beers)
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