De Beers, the world’s top diamond producer, will be profitable in 2009 even if turnover halves, its finance director said in an interview published in the Financial Times on Thursday.
“Trading conditions are tough,” Stuart Brown told the paper. “But because we saw it early and took very dramatic steps around the business, we are in a position to weather trade in 2009 and 2010 without any recourse to shareholder funds. Our plan for 2009 sees us remaining profitable, cash neutral and meeting covenants on our loans, even if overall turnover drops by 50%.”
He disputed an estimate from Barclays Capital that the firm lost $100 million per month in the Q1 of 2009 after a sharp fall in diamond prices over the past year.
Brown said De Beers was modestly cash-positive in March and although cash-negative February, “not anywhere close to the ($100 million) cited,” the paper reported.
He said the firm, which is 45% owned by mining group Anglo American, would cut production to save $1.5 billion in operating costs this year.
Last week De Beers announced it had stopped diamond exploration in the Democratic Republic of Congo because of financial pressure from the global economic downturn. (Reuters)