Reporting its preliminary financial results for 2019  De Beers said the total group revenue amounted to  US$4,605 million, as compared to a revenue of US$6,082 million in 2018; marking a decrease of 24%.  

Within this,  rough diamond sales stood at US$4.0 billion (2018: $5.4 billion) registering a fall of 26%.

“This was due to an 8% decrease in consolidated rough diamond sales volumes to 29.2 million carats (2018: 31.7 million carats) and a 20% reduction in average realised price to $137/ct (2018: $171/ct),” De Beers explained. “The reduction in realised price was driven by a 6% decline in the average rough price index and from a lower value mix of diamonds sold, in response to the weaker demand for higher value diamonds.”  

The Company also noted the measures it had taken to support the midstream segment which faced difficulties in 2019. “In response to the challenging midstream trading environment, De Beers offered increased supply flexibility to Sightholders and sold lower value and volume of rough diamonds to the midstream, while increasing marketing expenditure to $178 million (2018: $166 million) to further drive consumer demand for diamond jewellery,” De Beers stated.

In the reporting period, the Group produced 30.776 million carats, as compared to 35.297 million carats produced in the previous year; and sold  29.186 million carats as against 31.656 million carats sold in 2018.

Production in various regions was also lower. In Botswana production for 2019 decreased by 4%  to 23.254 million carats (2018: 24.132 million carats); Namibia production was lower by 15% to 1.7  million carats (2018: 2.008 million carats); South Africa’s production fell  by 59% to 1.922 million carats (2018: 4.682 million carats); and Canada reported production of 3.9 million carats (2018: 4.475 million carats) marking a decrease of 13%.

For 2019, De Beers’ Underlying EBITDA decreased by 55% to US$558 million (2018: US$1,245 million). This, the Company ascribed to “lower sales volumes, a lower value sales mix which curtailed mining margins, and the lower rough price index which reduced margins in the trading business”.

De Beers reported an Underlying EBIT of US$168 million and an EBITDA margin of 43%; as compared to, US$694 million and 8% for the respective heads in 2018.

 “Profitability in the mining business was supported by improved efficiencies and cost savings; so, although there was a 13% decline in production in response to weaker demand, with the business being impacted by mining cost inflation in southern Africa, unit cost increases were limited to 5%,” De Beers further explained.

De Beers also reported that in 2019, the Group “continued to invest in its downstream brands to support the long term growth of consumer demand for natural diamonds”. 

Commenting on the performance of its brands, the Company said De Beers Jewellers continued to “upgrade and expand” its retail network during 2019, and it also integrated its online and store presence into “an improved combined offering”..  Forevermark™, the Company added “continues to grow its presence and sales worldwide”. It is now available in around 2,500 retail outlets globally, with the brand being launched in Italy, Austria and Belgium during 2019. Dedicated Forevermark™-only stores are now operating in China, the US and India.

Looking back on the year gone by, De Beers noted the various challenges it had thrown up for rough diamond demand, including stock market volatility;   US-China trade tensions and the resulting in lower than expected holiday retail sales; leading  to higher than anticipated stock levels in the industry’s midstream at the start of 2019. “Throughout the course of 2019, the midstream inventory position was under further pressure due to the closure of some US 'bricks and mortar' retail outlets, an increase in online purchasing (where inventory levels are lower), and retailers increasing their stock held on consignment,” De Beers emphasised. “Tighter financing also affected the midstream’s ability to hold stock, all of which resulted in lower demand for rough diamonds.” 

The Company estimated that in US dollar terms, global consumer demand for diamond jewellery “was broadly flat” in 2019.  

“In 2019, De Beers continued to invest in its downstream brands to support the long term growth of consumer demand for natural diamonds,” De Beers noted.