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

To: Andrew who wrote (2555)	3/10/1999 10:48:00 AM
From: Goalie	Read Replies (1) \| Respond to of 7235

De Beers Implied 2nd-Half Net Falls 66% to $212 Mln Johannesburg, March 9 (Bloomberg) -- De Beers, the world's biggest diamond miner and marketer, implied second half 1998 net income fell 66 percent after demand fell in Japan, typically the second-biggest diamond market, and elsewhere in Asia. Second-half profit fell to $212 million, or 55 cents per share, from $623 million, or $1.64, in the second half of 1997, according to calculations by Bloomberg News. De Beers reduced its dividend for the full year by 22 percent to 80 cents a share from $1.03 a share the year earlier, the first cut since 1991. ''The earnings were a little lower than expected,'' said Roger Chaplin, an analyst at T. Hoare & Co. in London. ''De Beers have taken the brunt'' of the fall in diamond demand in 1998, and sales can now be expected to improve as diamond cutters will need to restock. In 1998, De Beers slashed the amount of diamonds it sold in a bid to prevent the collapse in Asian demand from affecting prices. In December, the Central Selling Organisation, De Beers' sales arm, said sales fell 28 percent last year to an 11-year low after it imposed quota's on the mines from which it buys diamonds, purchasing only 74 percent of their output. Net income in the year to Dec. 31 fell to $617 million, or $1.61 a share, from $1.23 billion, or $3.23, in the year-earlier period. De Beers' shares fell 6 rand, or 5.7 percent, to 100 rand. Before the results the mean estimate of four analysts polled by Bloomberg news was that full-year profit would fall 37 percent. 'Tough Year' Its been a difficult and tough year for us,'' said Nicky Oppenheimer, De Beers chairman, at a press conference. ''We see this as a prudent dividend to pay given the market conditions.'' Global demand for polished diamonds fell 3 percent in 1998, compared with a 5 percent fall in 1997, with sales in Japan falling 19 percent and sales in South East Asia plummeting 35 percent. Together Japan and South East Asia accounted for 27 percent of world sales compared with over 40 percent in 1996, said Stephen Lussier, marketing director of the CSO. China was the only country which showed an improvement, 3 percent, while sales collapsed 85 percent in Indonesia. By contrast sales surged 9 percent in the U.S. and 4 percent in Europe. Diamond Demand Sales have improved in the first two sales held by the CSO this year with analysts estimating that CSO sold up to $800 million of diamonds compared with $550 million last year. This is still well below the 1997 level of $1.2 billion. ''There has been little rough (uncut diamonds) on the market (from sources other than De Beers) in the first few months of the year,'' said De Beers managing director, Gary Ralfe. This is ''because of the problems (civil wars) in Angola and the Democratic Republic of Congo.'' De Beers said the improved sales do not necessarily signify a recovery in the diamond market. ''Sentiment is very much improved,'' said Oppenheimer in an interview. ''We hope this will carry through but we are treating this very cautiously.'' Earnings are not expected to return to 1997 levels until diamond demand recovers in Japan, said Ralfe. ''We wont see a restoration of a balance in world supply and demand until Japan recovers,'' said Ralfe. ''The major negative in our business is the Japanese economy.'' De Beers confirmed recent press reports that said the company is reviewing all areas of its business although it would not comment further other than to say no radical steps are being contemplated. South African daily newspaper, Business Day, said on Feb. 24 that De Beers was reviewing the role of the CSO in the diamond market as the buyer of last resort. De Beers will also oppose attempts by Namibia's parliament to change legislation so that it can compel Namdeb, a joint venture between De Beers and the Namibian government, to sell 10 percent of its diamonds on the open market rather than to the CSO, Ralfe said. ''We are not happy with it and we hope it is not going to be invoked,'' said Ralfe. '' We regard it as ultra vires to our contract'' with the Namibian government.