De Beers, the world's biggest diamond producer, posted an 8 percent rise in first-half rough diamond sales helped by higher prices and buoyant demand, but plans no more price hikes until later in the year to cut stockpiles. De Beers said on Monday sales by its London-based Diamond Trading Co rose to $3.2 billion from January-June 2005, largely in line with forecasts, and versus $2.983 billion in the year-earlier period.
Five analysts surveyed by Reuters had expected De Beers to increase diamond sales to $3.31 billion on average. Their forecasts were in a range of $3.17 billion to $3.53 billion.
De Beers, 45 percent owned by miner Anglo American, said its contribution to Anglo's headline profit would be $270 million, up from $217 million in the first half last year.
Sales for the second half of the year would, unlike previous years, at least match those of the first half, De Beers said. The firm's rough diamond sales for 2004 were $5.7 billion.
De Beers, which mines mainly in South Africa, Namibia and Botswana, said demand for rough diamonds from the cutting centres in the first half had been strong, and estimated demand for diamond jewellery in the United States was up by 6 percent.
Stocks of diamonds are also expected to fall, which would have a beneficial impact on both cash flow and earnings.
Production rose 23 percent in the first half to 23.7 million carats, and as a result of the increased production, stock levels have risen by about $400 million compared with June 2004.
De Beers Managing Director Gary Ralfe told an analyst conference call from London he expected a 7-8 percent rise in full-year 2005 production compared with 2004.
"Production looked positive and they seemed to have put some stock away so it looks like the sales will improve for the year on what we initially expected, due to inventory destocking," a Johannesburg-based analyst said.
NO IMMEDIATE PRICE RISE: Ralfe had said in an earlier conference call with journalists he hoped to hold off further price increases until late this year in order to bring down US stockpiles.
In 2004, De Beers raised its rough diamond prices three times, totalling around 14 percent, and has done so twice this year in January and June, both times by 3 percent.
"We would hope to hold these prices until the last couple of months of the year and not have a price increase until, say, November, although I am not saying we will have a price rise in November," he said from London.
"By the end of the year we should have a stockpile that is no larger than the stockpile we had at the end of 2004," he said but declined to give the actual figure for last year.
Ralfe said group production for the first half was ahead of budget by 5 percent, while last year it was behind by about 20 percent, mainly because of added output from Debswana, its Botswana unit.
Ralfe saw no major impact to diamond sales after China last week abandoned its dollar peg in favour of a basket of currencies to manage the yuan, but said Chinese demand was up. Eight out of ten new brides received a diamond ring, he said.
Analysts had said theoretically the currency change should make commodity imports cheaper for Chinese buyers.
Details on plans to sell a stake to a black group as required by South Africa would follow later this year, he said.
Anglo American shares traded 1.15 percent weaker by 1017 GMT at 1,379 pence in London.
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