JOHANNESBURG, South Africa – De Beers S.A. (search) , the world's biggest diamond producer, said Monday its profit fell by 0.6 percent in the first half of the year because of a weaker dollar and fewer sales of stockpiled gems.
However, De Beers said the market for rough diamonds remains firm and that it expects sales in the second half of the year to at least match those for the first half and that its stocks would be reduced.
"This should have a beneficial impact on both cash flow and earnings," the company said.
Profit for the six months ending June 30 was $339 million, compared to $341 million for the first half of 2004.
The company, which is 45 percent owned by Anglo American PLC (search), said production for the first half of the year was 23.7 million carats, up 23 percent from the first half of last year.
De Beers said the increased production had raised its stock levels about $400 million compared with the first half of last year.
Sales at the Diamond Trading Company (search), De Beers' sales and marketing arm, totaled $3.2 billion for the period, slightly less than the $3.29 billion reported in the first half of 2004. The company raised the price of rough diamonds twice in the first half of the year.
De Beers said earlier this year that five of its seven mines in South Africa were operating at a loss. The weak U.S. dollar, operating efficiency issues and the age of some of the operations were blamed for the problems.
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