De Beer Group has announced a 21% decrease in its revenue from the first half of 2024.
The diamond mining company highlighted in its financial report that a global decrease in diamond demand and increased competition created a challenging operating environment.
De Beers reported a 21% decline in total revenue from $2.8bn in H1 2023 to $2.2bn in H1 2024. The company also experienced a 22% year-on-year decrease in total rough diamond sales. Whilst the worldwide realised price remained stable, market conditions greatly affected the company’s results.
Economic challenges in China led to low consumer confidence in the diamond market. The US is experiencing similar economic uncertainty that is preventing diamond purchases. Competition from lab-grown diamonds is also affecting De Beers’ dominance in the market, although in India, their strong economic growth has underpinned positive natural diamond jewellery growth.
De Beers Group CEO Al Cook highlighted: “Rough diamond trading conditions continue to be challenging. Although demand in the US has been steady and India remains robust, consumers in China are buying substantially fewer luxury products. Retailers are very cautious as they restock, creating higher than normal levels of midstream inventory."
De Beers’ earnings before interest, taxes, depreciation and amortisation (EBITDA) for H1 2024 decreased by 14% to $300m. The company highlighted falling sales volumes and higher unit costs as the cause.
The company’s operational performance also took a hit in the first half of this year. De Beers’ rough diamond production reduced globally from 16.5 million carats to 13.3 million carats.
Production fell at sites in Botswana (24%), South Africa (3%) and Namibia (8%), but remained flat in Canada, decreasing only slightly from 1.4 million to 1.3 million carats.
De Beers has also cut its production guidance for 2024 by three million carats to 23–26 million in response to the “prolonged period of lower demand".
Despite the challenging market conditions, De Beers said it managed to carry out “several strategic changes”. Its Origins strategy aims to streamline operations and reduce costs by $100m annually. The company also developed a new marketing collaboration with leading jewellery retailers to increase demand for natural diamonds. A new technology called DiamondProof was also launched, which is designed to distinguish the between natural and lab-grown diamonds.
Moving into H2 2024, De Beers Group is anticipating the recovery of diamond demand and increasing customer confidence. The company has also acknowledged the ongoing challenges from increasing lab-grown diamond competition and the need for appropriate marketing and product differentiation.
De Beers Group CEO 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.”
