De Beers Group Reports 21% Revenue Decline Amid Challenging Market Conditions
De Beers Group has announced a 21% decrease in revenue for the first half of 2024, highlighting the impact of a global decline in diamond demand and increased competition in the industry.
According to the financial report, total revenue dropped from $2.8 billion in H1 2023 to $2.2 billion in H1 2024. The company also experienced a 22% year-on-year decrease in total rough diamond sales.
While the global realized price for diamonds remained stable, adverse market conditions significantly affected the company’s performance.
Economic challenges in China have resulted in low consumer confidence in the diamond market, while similar uncertainties in the U.S. have hindered diamond purchase`s.
Additionally, competition from lab-grown diamonds continues to challenge De Beers’ market dominance, although strong economic growth in India has supported positive growth for natural diamond jewelry.
De Beers Group CEO Al Cook noted, “Rough diamond trading conditions continue to be challenging. Although demand in the U.S. has been steady and India remains robust, consumers in China are buying substantially fewer luxury products. Retailers are very cautious as they restock, leading to higher-than-normal levels of midstream inventory.”
The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for H1 2024 decreased by 14% to $300 million, attributed to falling sales volumes and higher unit costs.
De Beers’ operational performance also suffered, with global rough diamond production decreasing from 16.5 million carats to 13.3 million carats.
Production declined at sites in Botswana (24%), South Africa (3%), and Namibia (8%), while Canadian output remained relatively flat, decreasing only slightly from 1.4 million to 1.3 million carats.
In response to the prolonged period of lower demand, De Beers has reduced its production guidance for 2024 by three million carats, now expecting to produce between 23 million and 26 million carats.
Despite these challenging market conditions, De Beers has implemented several strategic changes. Its Origins strategy aims to streamline operations and reduce costs by $100 million annually.
The company has also initiated a new marketing collaboration with leading jewelry retailers to boost demand for natural diamonds and launched a technology called DiamondProof, designed to distinguish between natural and lab-grown diamonds.
As De Beers moves into the second half of 2024, it anticipates a recovery in diamond demand and increasing customer confidence.
However, the company recognizes ongoing challenges from the rising competition of lab-grown diamonds and the need for effective marketing and product differentiation.
Al Cook explained, “While we expect the challenging rough diamond trading conditions to continue in the near term, the actions we are taking will support the recovery in natural diamond demand and position De Beers well for the future.”
