JOHANNESBURG -(Dow Jones)- De Beers SA, the world’s largest diamond company, Friday said it swung to a loss in the second quarter of the year after sales slumped and it cut production in response to a fall in demand.
De Beers, 45% owned by Anglo American PLC (AAUK), said production for the first half of 2009 was down 73% to 6.6 million carats, with the reduction concentrated in the first quarter when output was down 91% to 1.1 million carats.
The company posted a second-quarter loss of $186 million, and net earnings for the half-year of just $3 million against net earnings of $316 million in the first half of 2008.
Six-month sales were 54% lower at $1.71 billion from $3.74 billion previously, De Beers said. Sales of rough diamonds for the period were 57% lower at $1.4 billion, although the company said after very tough trading conditions in the first quarter there was a significant pick-up.
The company in February said it was borrowing $500 million from its shareholders to act as a buffer in anticipation of a tough market for gem sales in 2009.
As the global economic turmoil picked up steam in the final quarter of last year, De Beers deferred investments, cut jobs and reduced production in line with client demand. The company's Debswana Diamond Co. joint venture in Botswana suspended mining for 50 days and its Namibian Namdeb Diamond Corp. venture halted output for three months.
Founded in 1888 and taken private in 2001, De Beers produces and markets some 40% of the world's rough diamonds by value. The Oppenheimer family owns 40% of the company and the Botswana government 15%.
~By Robb M. Stewart Of DOW JONES NEWSWIRES