(5 minutes)
· De Beers is contemplating a massive restructuring of its business model. That will encompass revamping its mines operations, restructuring of jewelry business and overhaul of diamond sales
· De Beers sales plummeted. It sold just US$56 million of rough diamonds in the second quarter, down about 96% from a year ago
· The company already evolved a plan to bridge the widening gap between revenue and cost
· This ranges from selling rough stones, recovering diamonds to cutting overheads
De Beers is contemplating a massive restructuring of its business model. That will encompass revamping its mines operations, restructuring of jewelry business and overhaul of diamond sales. Insiders opine that its entire business has been disrupted by pandemic and to salvage it from the present predicament, massive overhaul of the operations is inevitable.
De Beers is the world’s biggest and oldest producer of jewelry and diamonds and is one of the most powerful global luxury brands. An upholder of tradition and conservative to the extent of marketing strategies woven to that of the old world values and standards, many have been observing that in the present times to survive, it has to change its business model. Significantly, after taking over as the CEO in 2016, Bruce Cleaver is on the job to expand and accelerate its operations to be in sync with the changing times.
De Beers sales plummeted. It sold just US$56 million of rough diamonds in the second quarter, down about 96% from a year ago. At this rate, the company would post a US$100 million loss in the first half of the year, according to analysts. The company already evolved a plan to bridge the widening gap between revenue and cost. This ranges from selling rough stones, recovering diamonds and cutting overheads.
De Beers owned by Anglo American Plc and established in 1888, has an employee strength of over 20,000 spread around the world. It is headquartered in London and mimes in four countries -Botswana, Canada, Namibia and South Africa. Its expertise ranges from exploration and production to rough diamond sales and diamond jewellery retail. The Group has rough diamond sales operations in Belgium, Botswana, Dubai, Hong Kong (SAR of China), Israel, Namibia, Singapore and South Africa. It sells around 90 per cent of rough diamonds, by value. It has two types of customers – sight-holders and accredited buyers. The former (sight-holders) has a contract covering the sale of diamonds over an agreed period, while latter (accredited buyers) have a more ad-hoc arrangement.
While the company officials are refusing to divulge the future plan for restructuring the company, the management admits that pandemic has accentuated its declining business. The company remains committed to restore its pristine glory. The officials maintain that the details of the restructuring is still worked out. That holds the key to keep the company, which ruled the roost in diamond trade for more than 132 years to survive and ticking.
