De Beers’ total revenue in H1 2022 that ended 30th June increased 24% year-on-year to $3.6 billion, with rough diamond sales rising 27% to $3.3 billion, as the midstream replenished their stocks following strong consumer demand over the holiday season.
Rough diamond sales volumes dropped 20% to 15.3 million carats as against 19.2 million in the prior period, which benefited from strong demand recovery following the impact of Covid-19 in 2020, De Beers informed.
The average realised price rose by 58% to $213/carat, driven by a larger proportion of higher value rough diamonds sold, as well as growth in the De Beers rough diamond price index. The rough price index increased by 28% compared with the same period in the prior year, reflecting positive consumer demand for diamond jewellery as well as tightness in inventories across the diamond value chain, it noted.
De Beers’ underlying earnings before income tax, depreciation and amortisation (EBITDA) increased by 55% to $944 million, reflecting the recovery in sales. Unit costs were flat at $59/carat as the benefit of higher production was offset by rising inflation and input costs.
Capital expenditure increased by 22% to $250 million, largely due to a ramp-up in the Venetia underground project, ahead of first production in 2023.
“Following a continued strong recovery in consumer demand for diamond jewellery over the holiday season at the end of 2021, the year began with healthy demand and inventory conditions throughout the diamond pipeline as retailers restocked in the first two months of the year – with polished diamond prices rising on the back of the strong trading environment,” De Beers said.
“The onset of the Russia-Ukraine war initially affected industry sentiment negatively as diamond businesses sought to understand the potential impact on supply and demand from both consumer self-sanctioning in western markets and subsequent formal sanctions.
“Nonetheless, despite the impact of the war and associated sanctions, as well as the recovering demand for luxury travel, consumer demand for diamond jewellery in the key US market has continued to post positive growth on the record levels of demand seen in 2021. Polished prices subsequently started to rise again in the second quarter, especially in the smaller diamond sizes (of which Russia produces a large share) but softened slightly in June from higher inventory levels and increased economic uncertainty. The overall improvement in prices was despite the recovery in Chinese consumer demand for diamond jewellery seen at the start of the year being impacted in the second quarter by the latest wave of Covid-19 and subsequent lockdowns in major Chinese cities.
“Demand for De Beers’ rough diamonds remained robust throughout the first half of the year, supported by strong US consumer demand for diamond jewellery, tightness in global rough diamond supply and De Beers’ focus on enhanced provenance assurance for its rough diamonds through its blockchain-backed TracrTM technology platform.”