Diamond giant De Beers SA reported
a shocking 99% drop in half year net profits due to the global recession. De Beers calls current trading conditions "historically difficult."
In the six months to June 30, net profit fell 99 percent to $3 million from $316 million in the same period last year, the company said, while total sales fell 54.2 percent to $1.71 billion, from $3.74 billion during the same period last year.
De Beers, which is 45-percent owned by South African resources giant Anglo American, said the fall in sales was due to reduced purchases by core clients, as they cut inventory levels, along with a subdued demand for diamonds in the U.S. retail market.
"The industry has been severely impacted by the global economic environment being the most difficult in decades," the company said in a statement.
De Beers said that it has responded to the current conditions by cutting its overall costs by more than 50 percent compared to the same period last year, reducing its global workforce by 23 percent and cutting production by 73 percent compared to the same period last year.
The company said that during the second quarter it did see some increase in the price of rough diamonds. But the company is taking a cautious approach in terms of cost management, production and sales. The virtual collapse of the diamond and gemstones market has caused great economic hardship in the countries which depend on mining to provide jobs.
