March 8, 2000
De Beers Posts Stellar 1999 Results
"It was an amazing turnaround for the diamond market as a whole 1999 was a very good year for De Beers," company Chairman Nicholas Oppenheimer said at a morning press conference today. Sales for De Beers' Central Selling Organisation at the end of the year were up 57%, to a record $5.24 billion.
Oppenheimer credited a rising demand for rough and smaller amounts of supplied goods from sources other than De Beers. He also credited strategic changes in the way De Beers does business for the good news.
The diamond account was up 78%, with sales at $791 million and earnings for the company rose to $686 million, almost double the figure from 1998. De Beers also boasted a strong cash flow position, and what Oppenheimer described as a "very pleasing reduction of [diamond] stocks."
De Beers is looking to the U.S. retail market to remain strong and has confidence in a rebounding southeast Asian market. Barring unforeseen economic downturns, De Beers expects results for 2000 to be at least on a par with last year's.
Gary Ralfe, De Beers' managing director, detailed some strategic changes. De Beers is still developing and beginning to implement a four-pronged plan which includes:
- As-Is Plus Program, an internal review which includes a $24 million reduction in the advertising budget while increasing the effectiveness of advertising. This plan also includes mining cost reductions of about 10% and a reduction of the diamond stockpile without affecting the market.
- Preferred Supplier Program, which develops partnerships and new business downstream of the CSO. This will include a new package of services De Beers will offer sightholders. "We want to become the supplier of choice to our clients, rather than the seller of last resort," Ralfe said. The plan is still in development and will be closely linked to De Beers' branding efforts. De Beers hopes to also motivate a greater diamond promotion and advertising expenditure by its preferred clients.
- Enhancing Brand Value, which uses the De Beers brand to sustain the core business of production and marketing of rough diamonds. Ralfe said De Beers would announce more changes in the months ahead regarding this plan.
- Internal Streamlining, in which department heads will speed up the decision-making process and performance of the company.
- by Robert Weldon, G.G.