De Beers reported $405 million in profits for the first six months of the year, a $33 million dip from last year, but still smaller than the 41% dip in sales the company reported for the first six months of the year.
Most analysts said the Asian financial crisis was to blame Polished diamond imports to the Japanese market dropped 38%, while Hong Kong imports slid 50%. While analysts said they couldn’t see the situation improving in the near future, a De Beers statement said that the company is considering increasing supply somewhat during the last six months of the year.
Analysts said the “new risk” for De Beers was the United States, with many worrying that the Asian market and volatility of the stock market could also cause problems here. The U.S. stake of the diamond market is now 40%, an increase from the 30% it claimed in the 1980s.
While analysts said the results were very bad for the company, it must be noted that unlike most other companies, De Beers cuts their sales voluntarily, in response to the decreased demand from Asia.
“We have suffered more than the overall retail market,” De Beers Managing Director Gary Ralfe told a news conference.
Still, the Asian crisis has hurt De Beers’ share price. Recently, it sank down to 13 15/16, a more than 50% dip from its 52-week high of 32.