De Beers Expects 15% Decline in Sales

March 1, 2001

De Beers Expects 15% Decline in Sales

De Beers announced yesterday it expects a 15% decrease in rough diamond sales this year because of anticipated slower sales in the U.S., which buys half of the world's polished diamonds. This estimate is up 5% from De Beers' original forecast on Feb. 15 of a 10% decline in sales. "The American trade is...currently in an overstocked position," the company said in a 2000 results statement. It attributed the overstocks to lower sales during the Christmas season.

"We do have concerns about the sales in 2001 relating to the performance of the U.S. economy," said De Beers Chairman Nicky Oppenheimer during the presentation of the company's final 2000 results. De Beers is now targeting sales of $4.8 billion for 2001, compared to sales of $5.67 billion in 2000.

Critics of an Oppenheimer group bid to take the company private (see related article) accused De Beers of exaggerating the expected fall in diamond sales this year, the New York Times reports. Critics feel the price the Oppenheimer group offered to stockholders is too low and De Beers' depressed sales forecast has been announced to justify the Oppenheimer offer. But De Beers Spokesman Andrew Lamont told the New York Times the forecast "relates entirely to the market outlook."

De Beers also confirmed its earlier earnings estimates. The company says pretax profits surged 73%, a 1% increase from Feb. 15 estimates, to $1.68 billion in 2000. Net income for the company rose 84% to $1.29 billion, the New York Times reports.

- by Julia M. Duncan and Peggy Jo Donahue