This is from CNN Fn:
JOHANNESBURG, South Africa (Reuters) - Shares of global
diamond giant De Beers dropped more than 7 percent Friday
on concerns the firm will cut its dividend because of poor
global retail demand, analysts said.
"There is a rumor in the market that De Beers will cut its
final end-year dividend... There's a poor (diamond) market out
there," said Hilton Ashton, diamond analyst at BOE
Securities.
De Beers stock was at 76 rand, down six rand, or 7.3
percent.
De Beers in August held its dividend at 27.4 cents despite
posting 33 percent lower headline earnings of $405 million for
the half-year ended June 30.
The firm's marketing arm, the Central Selling Organisation
(CSO) -- which controls 70 percent of the world's supply of
rough diamonds -- is scheduled to announce the value of 1998
sales Dec. 15.
Industry sources said second-half rough sales will be down
again, but probably not as sharply as the 41 percent drop in
the first half.
De Beers Managing Director Gary Ralfe last month said
CSO sales this year will be "substantially down" from the
$4.5 billion recorded in 1997.
The company's preliminary annual statement is
provisionally scheduled for March 8-9 and the annual report
for mid-April.
Retail diamond demand has faltered since Asia's economic
crisis, and industry executives are closely watching how U.S.
demand reacts to concerns of a global slowdown.
"Doubts have been expressed over the robustness of the
U.S. retail market over Christmas and Thanksgiving... There is
little doubt they (De Beers) will cut the dividend," said Keith
Bright, mining analyst at Fedsure Asset Management.
Recent volatility on Wall Street has raised concerns that
the buoyant U.S. stock market may be headed for a hefty fall
which would could sap consumer spending.
The United States accounts for up to 45 percent of the
diamond market.
The Asian financial crisis has severely depressed
important markets such as Japan, the number two diamond
market, and Hong Kong. Japanese imports of polished
diamonds were down 38 percent in the first half of 1998,
while Hong Kong recorded a fall of more than 50 percent in
the same period.
De Beers, through its mining interests in South Africa,
Botswana and Namibia, produces about 50 percent of the
world's diamonds.
PHIL |
