Petra Diamonds Revenue Down 6 Percent in Weak Market

- September 17th, 2019

Precious gem miner Petra Diamonds has posted a 6 percent year-over-year revenue drop for its 2019 fiscal year.

Gem miner Petra Diamonds (LSE:PDL) has posted a 6 percent year-over-year revenue drop for its fiscal year 2019.

The London-listed company reported total revenue of US$463 million — a decline of US$31 million from the previous year, despite producing more diamonds.

Petra cites weak market conditions for the revenue shortfall.

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“Petra achieved a solid operational performance in FY 2019, generating operating free cash flow of US$70.5 million, despite a weaker market, and during the company’s transition from its expansionary capital expenditure phase towards steady-state production,” said Richard Duffy, CEO.

The Africa-focused miner isn’t the only diamond company impacted by a stagnated global gem market. Canadian company Stornoway Diamond (TSX:SWY,OTC Pink:SWYDF), which operates the Renard mine in Quebec, filed for creditor protection earlier this month. The move sent shares plummeting down 91.67 percent.

Sector major De Beers has also felt the pinch of a shrinking market, prompting a reduction in the company’s production outlook.

A slip in worldwide demand brought on by an economic slowdown paired with higher recovery rates of minor categories has created a small stone surplus in the market, weighing prices down.

Despite the net revenue drop for 2019, Petra has hit some significant milestones. In early April, the miner, which operates three mines on the African continent, recovered a 425 carat stone from its renowned Cullinan mine.

The white type II gem is the largest recovered by the company in 2019 and the third-largest stone recovered from the mine to date.

The world famous South African open-pit produces as much as 25 percent of the world’s gem quality stones. It is also the site where two diamonds that are now a part of the coveted crown jewels were unearthed.

According to Petra, the miner has undergone a strategic business review as part of the company’s Project 2022 debt reduction initiative.

“In the short term, we remain firmly focused on the rigorous execution of Project 2022, which is expected to reduce the company’s high net debt levels, against this backdrop of a challenging diamond market,” said Duffy. “Addressing this leverage will enable us to capture future organic growth opportunities and reposition Petra as the leading mid-tier diamond producer.”

Production levels for 2020 are estimated at 3.8 million carats, on par with output in 2018 and 2019.

Shares of Petra Diamonds were down 13.5 percent on Tuesday (September 17), trading at GBX 6.99.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

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