The latest quarterly report from the company, released on 16 July, revealed that rough diamond sales had fallen by $US1.2 billion – or more than 95 per cent – compared with the same period in 2019.
The total number of carats sold fell from 9 million in Q2 of 2019 to 300,000, while revenue decreased from $US1.3 billion to $US56 million.
Due to the disruption of COVID-19, De Beers was forced to cancel its third Sight of the year just hours before it was due to begin on 30 March, and offered some Sightholders the option to defer 100 per cent of their allocation at two subsequent Sights.
The report noted, “During Q2, the demand for rough diamonds was significantly impacted by a combination of COVID-19 restrictions impacting consumer demand and access to southern Africa, as well as severely limited midstream cutting and polishing capacity due to lockdowns, particularly in India.”
David Prager, executive vice-president corporate affairs, De Beers, had previously stated, “We’ve never had an environment where commercial activity right across the whole pipeline, let alone the whole luxury goods industry, has simply come to a halt.”
However, US financial publication Bloomberg quotes Bruce Cleaver, CEO De Beers, as saying that the pandemic “has compounded and exacerbated difficulties that already existed in the diamond world… which have inhibited our growth over the past several years [and] have become even more urgent to address”.
Indeed, De Beers total revenue decreased by 24 per cent in 2019 to $US4.6 billion from $US6.1 billion in 2018, driven by a 26 per cent decline in rough diamond sales and a 20 per cent reduction in average price per carat.
Bloomberg reports that De Beers is now planning to sell rough stones “more quickly and in a more integrated way” – perhaps indicating the 10-Sights-per-year structure could be abandoned – as well as reducing other costs within the business.
“We are now working through a process to start to shape an organisation that is better equipped and empowered to deliver this change,” the report quotes Cleaver as saying. “It won’t be easy for any of us. We will, very likely, come out of this a more focused and more connected business.”
While De Beers’ total diamond product for Q2 of 2020 decreased 54 per cent, its full-year guidance of 25–27 million carats remained unchanged at the time of publication.
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