October 22, 1999
De Beers To Halve Stockpiles
In an attempt to increase shareholder value, De Beers announced it will reduce its Central Selling Organisation's diamond stockpiles, which were $4.6 billion at the end of 1998, to $1.5 billion-$2 billion over the next few years.
"The working stock level in London will be cut over some time," says De Beers spokesperson Tracey Peterson in a report by Reuters. "We
will be working hand-in-hand with incremental demand so we don't
affect the market."
The company said last week it will change its marketing policy to stock diamonds according to global demand rather than automatically holding them back for the stockpile. This year, De Beers made headlines by digging into its stockpiles to meet increasing demand in Asia and the continuing strong demand in the U.S. The company is expected to post sales of more than $5 billion at the end of this year, compared to $3.3 billion in 1998.
However, share prices have "underperformed" during the past 10 years, according to Reuters. Peterson says the company hopes this move will boost share prices by generating more earnings.
- by Stacey King