Petra’s diamond production down 2% in H1 FY 2015

Petra Diamonds announced its interim results for the six months to 31 December 2014. During these six months, the company’s revenue rose 16 percent to US$214.8 million. This included sales proceeds for two exceptional diamonds for combined revenue of US$38.7 million. Carats sold were down 1 percent to 1,401,575 carats (the same stood at 1,414,818 carats in the previous year). Carat sales were lower than carats produced due to the seasonal timing of Petra’s tenders; Petra held three tenders in H1 (equating to five months’ production) and will hold four tenders in H2 (equating to seven months’ production).

Net profit stood at US$39.1 million, higher than the previous year profit of US$28.4 million. The company’s production slipped 2 percent to 1,601,069 carats (the same was 1,634,576 carats in the corresponding previous six months).

The company noted that the rough diamond market was soft as it usually is during the post summer period, in H1 FY 2015. Further pressure on prices was evident due to some short-term indigestion in the pipeline caused by issues relating to liquidity, polished inventory levels and the impact of the strong US Dollar on US Dollar denominated diamond prices. Petra estimates that diamond prices achieved by it on a like for like basis were down on average by 8 to 9 percent for the period.

The company’s first tender of H2 FY 2015 resulted in good levels of interest and slightly firmer market conditions. If this steady activity continues in the pipeline in the months to come, the company expects firmer pricing towards the end of H2 FY 2015.

Johan Dippenaar, CEO of Petra, commented: “Petra has achieved strong first half results, further to the continued delivery of our growth strategy. Our expansion programmes are on track at all operations, and production is expected to grow to ca. 3.3 million carats for FY 2015 and to ca. 5 million carats by FY 2019. While the diamond market remains under pressure, there are encouraging signs that we are seeing a stabilisation in market conditions, as evidenced by good demand levels at our first tender in H2 FY 2015. Our continued growth trajectory and robust financial position places Petra in a good position to capitalise on the attractive medium- to long-term fundamentals for our industry.”

As at 31 December 2014, the Group had diamond inventories of US$43.6 million. The company forecast a production to grow further to ca. 3.3 million carats in FY 2015 and on to ca. 5 million carats in FY 2019. The continued focus on operational performance, combined with our robust financial position, according to the company will enable it to capitalise on the positive medium- to long-term outlook for our industry.