Earnings at De Beers fall as diamond sales drop by 21%

De Beers, the world's largest diamond producer, yesterday announced that profits halved last year as the global economic downturn discouraged consumers from buying the precious gems.

Sales of rough-cut diamonds by the Diamond Trading Company, De Beers' marketing arm, fell 21.5 per cent to $4.45bn (£3bn) in the year to 31 December. Earnings net of exceptional items were down from $1.7bn to $837m.

The company said the like-for-like comparison was partly skewed because it was taken private by the wealthy Oppenheimer family last year and because 2000 marked an all-time high in diamond sales due to the "Millennium effect". Still, the company, which supplies 65 per cent of the world's uncut gems, acknowledged that the trading environment was very tough for much of last year.

Gary Ralfe, the managing director of De Beers, said: "It was a difficult year for De Beers and for the diamond industry in general. Our product, like all luxury products, suffered".

The annual drop in sales was not as great as some analysts predicted, mainly because the company made up some ground in Christmas trading.

On its prospects for this year, De Beers said in a statement: "Sales prospects for 2002 will depend on the timing and extent of any recovery in the world economy and the level of polished stocks that the trade pipeline will be confident to carry."

De Beers delisted from the Johannesburg Stock Exchange last year. It is now owned by the Oppenheimers, the London-listed mining giant Anglo American and Debswana, a joint-venture between De Beers and the Botswana government.