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Gold/Mining/Energy : SOUTHERNERA (t.SUF) -- Ignore unavailable to you. Want to Upgrade?

To: Goalie who wrote (2277)	12/14/1998 9:45:00 AM
From: PHILLIP FLOTOW	Respond to of 7235

Look what I found on the news wires: LONDON (December 14, 1998 09:40 a.m. EST nandotimes.com) - Sales of uncut diamonds by De Beers' Central Selling Organization slumped 28 percent in 1998 to $3.345 billion, hammered by plunging demand in Japan and East Asia, the diamond group said on Monday. The figure was the lowest since 1987, underlining an industry malaise which analysts believe may force De Beers to slash its 1998 dividend. The London-based CSO, which supplies 70 percent of the world's rough diamonds, reported sales of $1.645 billion in the second half of 1998, down three percent on the first-half level of $1.7 billion. "Good levels of retail sales of diamond jewelry in the United States and to a lesser extent in Europe have been insufficient to compensate for lower sales in Japan and East Asia," De Beers said in a statement. Sales of diamond jewelry in the U.S., the world's biggest market, held up well and early indications suggested strong demand for the important Christmas sales period after a seven percent advance the first half of the year. But retail demand in Japan, the second largest market, was some 20 percent below 1997 in dollar terms while polished stone imports into Hong Kong were down around 40 percent. Confidence throughout the industry remained "fragile" and De Beers said there were increasing problems of liquidity in the world's leading cutting centers. In the face of weak demand, the CSO -- which sells stones to a select group of buyers at 10 "sights" each year -- has restricted the supply of rough material entering the supply chain. And the organization said it would continue to hold back sales of uncut material "in the interests of stability." But analysts said the price being paid was an unwieldy build up in stocks at De Beers, which has controlled the global diamond market with an iron grip since 1930. Roger Chaplin, an analyst at stockbroker T. Hoare & Co, estimated the CSO would end the year with a stockpile of some $5 billion worth of diamonds -- equivalent to nearly 18 months of sales. And with poor sales dragging De Beers earnings down, Chaplin expects the company to take a knife to its 1998 dividend: "I think they are going to cut it by about 30 percent. I was previously going for about 80 cents for the year whereas I would now say about 70," down from 102.8 U.S. cents in 1997. De Beers said it would consider the final dividend in March 1999 "by which time the results of the 1998 Christmas season will be known and prospects for 1999 will be clearer." The mining giant held its interim dividend at 27.4 cents in August despite posting 33 percent lower headline earnings of $405 million in the half-year ended June 30. Shares dealers said the market had been braced for a poor set of figures from the CSO but De Beers shares still surrendered some ground on the Johannesburg Stock Exchange, edging down 50 cents, or 0.7 percent, to 76.60 rand by 1340 GMT. The stock hit a year high of 137.80 in April this year but has since recorded a relentless decline in the face of weak Asian demand, despite the conclusion of an important three-year marketing deal with top Russian producer Alrosa last month. By BEN HIRSCHLER, Reuters PHIL