Sales of rough diamonds in 1999 by De Beers reached $5.24 billion, 57% higher than the previous years’ total of $3.3 billion. Sales in the second half of 1999 were $2.8 billion, 70% higher than the same period the year before.
A De Beers statement noted that in 1998 the CSO reduced sales to the market to adjust to the continuing problems in Japan and South East Asia and disruption in the global financial markets. This left stocks at a low level at the start of 1999.
But then, things turned around, De Beers said, because of improvement in the major retail markets, with continuing strength in the U.S., increased polished diamond imports into Japan, some recovery in South East Asia and steady growth in Europe. The low level of stocks, together with increased sentiment throughout the diamond industry, enabled the CSO to increase its sales above the level of increased retail demand.
In addition to the general market recovery, the CSO has actively pursued a number of initiatives to increase sales, particularly of slow-moving stock (J-K colors) which had been adversely affected by the economic difficulties in Japan and South East Asia.
Analysts said the results were even higher than the consensus. After the news, De Beers share price rose 4%. It has more than doubled since the beginning of 1999.
Most analysts expect next year to be even stronger. Managing Director Gary Ralfe says he hopes De Beers will sell at least as many diamonds next year as it did this year. And while Japan did not fully recover this year, he thinks it could recover next year. De Beers also hopes the success of its “buy diamonds for the Millennium” campaign will underpin diamond sales in the year 2000.
Ralfe said that retail demand for diamonds in America increased more than 10% in the first ten months of the year. Total sales to Japan in 1999 in yen fell 3%, but rose in dollars.