Feb 23, 2024

© De Beers

De Beers Sees Sharp Decline In 2023 Revenue & Profit

De Beers reported a steep drop in revenue and profit for the year 2023, as the global diamond industry faced a severe downturn due to the challenging macro-economic conditions, limited consumer demand growth and a cautious retail scenario.

De Beers’ total revenue decreased by 35% to $4.3 billion, compared to $6.6 billion in 2022. The company sold 24.7 million carats of rough diamonds in 2023, a 19% decrease from 30.4 million carats in 2022. The average realised price of its rough diamonds was $147 per carat, a 25% decrease from $197 per carat in 2022.

The company attributed the lower prices to a larger proportion of lower value rough diamonds being sold, as well as a 6% decrease in the average rough price index, which reflects the market conditions and the product mix.

The company's underlying EBITDA (earnings before interest, taxes, depreciation and amortisation) plunged by 95% to $72 million, from $1,417 million in 2022. The company said the lower sales volumes and prices negatively impacted its margins in the trading business.

De Beers also recorded an inventory write-down of $0.2 billion on its rough stock, reflecting the lower expected future sales prices. The company's unit cost increased by 20% to $71 per carat, mainly due to lower production volumes from its Venetia mine in South Africa, which is undergoing a transition from open pit to underground operations.

The company's capital expenditure increased by 5% to $623 million, as it continued to invest in its life-extension projects, such as the Venetia underground project and the Jwaneng Cut-9 project in Botswana, which are expected to extend the life of the mines beyond 2040.

De Beers also recognised an impairment of $1.6 billion to the carrying value of its assets, reflecting the near term adverse macro-economic outlook and industry-specific challenges, such as the oversupply of polished diamonds, the reduced availability of credit, and the consumer preference shift to lab-grown diamonds.

Despite the challenging year, De Beers said it made progress in securing its long-term future in Botswana, its largest producing country. The company and the Government of Botswana signed Heads of Terms for a new 10-year sales agreement for Debswana's rough diamond production and a new 25-year mining licence for Debswana, the joint venture between De Beers and the government.

The new sales agreement and mining licence are subject to approval by Anglo American's shareholders, as both Anglo American and the Government of Botswana are shareholders in De Beers. The company said the new arrangements will provide certainty and stability for both parties and enable them to continue their partnership for the benefit of Botswana and its people.

De Beers also reported a stable sales performance for its retail business, De Beers Jewellers, despite the global macro-economic headwinds and the challenging Chinese sector. The company said it focused on enhancing its online presence, offering personalised services, and launching new collections and campaigns to attract and retain customers.

The miner said the long-term outlook remains favourable, driven by the ongoing focus on diamond provenance and declining wholesale prices of lab-grown diamonds, which will reinforce consumers’ understanding of the differences between lab-grown and natural diamond jewellery.