De Beers has announced that total revenue plummeted 54% to $1.2bn (£920m) in its half-year results, with rough diamond sales falling to $1bn (£767m), down from the $2.3bn (£1.76bn) reported the year prior.
In light of the damaged performance, CEO Bruce Cleaver told Reuters that the group would “likely” proceed to cut jobs in a bid to restructure the group and reduce costs.
According to Reuters, official consultations with workers will begin on 11 August. Cleaver said the business overhaul was “likely to lead to some job losses, but I can’t tell you at this point what that number will be”.
The process is set to last for three months, and will involve a review of mining, rough sales, retail and the corporate centre, though exclude joint venture businesses in Botswana and Namibia where 20,000 people are currently employed.
It comes as rough diamond sales volumes crashed by 45% to 8.5 million carats, meanwhile, due to the “significant impact” of Covid-19 on the global diamond industry.
The average realised price decreased by 21% to $119/carat (£91/carat), driven by a higher proportion of lower value rough diamonds being sold in the first two sales of the year, as well as an 8% decline in the average rough price index.
In the same period, underlying EBITDA fell to $2m (£1.5m) owing to the impact of the “considerably lower” sales volumes and the lower rough price index, which reduced margins in both the mining and the trading businesses.
In its mining business, rough diamond production fell by 27% to 11.3 million carats in light of lockdowns in southern Africa. While mining operations restarted following the easing of regional lockdowns, production resumed at lower levels, reflecting the reduced demand for rough diamonds following the crisis.
Meanwhile, jewellery retail stores were “significantly affected” by Covid-19, with the majority of De Beers Jewellers stores and Forevermark outlets closed across key markets for a “considerable” part of the reporting period.
Looking ahead, the group noted the market outlook was “highly uncertain” due to the possibility of a second wave of Covid-19 infections, as well as the “shape and strength” of the global macro-economic recovery.
It said the “significant challenges” of subdued rough diamond demand “look set to continue in the short term”, particularly with the ongoing restrictions to travel in southern Africa.
In a statement, De Beers said: “All parts of the diamond supply chain were severely impacted by the global lockdown measures introduced in response to the Covid-19 pandemic in the first half of 2020.
“From February, the Covid-19 outbreak began to have a significant impact on diamond jewellery retail sales and supply chain. Jewellery retailer restocking has therefore been very limited, with many jewellers suspending all polished purchases and/or delaying payments to their suppliers.”
It added: “A gradual opening of diamond cutting and polishing centres started at the end of May; however, Covid-19 restrictions have remained in place, particularly in India, limiting capacity. De Beers and other major suppliers increased flexibility in response to this lower demand.
“Rough diamond sales have also been materially affected by lockdowns and travel restrictions, delaying the shipping of rough diamonds into cutting and trading centres and preventing buyers from attending sales events.”