BETTER than expected half time results from De Beers helped push the
shares ahead 34p to 1317p after the diamond giant increased attributable
earnings 8.6% to $353m (#238m).
The group has already announced that it enjoyed the best ever half
yearly sales performance with a 42% surge to $2543m (#1700m).
That was a result of a combination of fewer Angolan and Zairean
''submarine'' or illicit uncut diamonds reaching Antwerp because of
increasing civil strife in those two countries and the relaxation of
Indian exchange control leading to increased demand from diamond cutters
in that country.
There were also fewer Russian polished diamonds in the market.
However, the diamond account margin came under pressure with a
year-on-year fall from 21.2% to 14.7% with fewer large stones being
sold.
There will also be an increased proportion of diamonds coming from
independent producers such as Botswana and Namibia which are lower
margin than De Beers' own production in South Africa.
Interim group pre-tax profit actually showed a slight (6%) decline to
$444m because of lower investment income and interest received although
these were offset by a lower tax charge to boost the earnings figure.
The market is looking for an increase in earnings from $491m to about
$550m or 140 cents per share.
The interim dividend has been held at 25.2 cents (17p) and it is
feasible there could be a slight recovery in the total from last year's
79.1 cents for a 4% yield.
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