Petra’s revenues in Q1FY2016 stands at nil

 Petra’s revenues in Q1FY2016 stands at nilPetra Diamonds Limited announced its trading update for the period from 1 July 2015 to 27 October 2015, in which its production and sales were recorded for the period between 1 July 2015 to 30 September.

The period recorded zero revenues for the company – (Q1 FY 2015: US$100.8 million). The company’s first tender for FY 2016 only took place in October.

The company attributed its nil results in revenues to the significant weakening of the South African Rand since the start of FY 2016 which mitigated the cashflow impact of lower US Dollar prices, the excess polished inventory in the pipeline, a slowdown in demand especially in China, financing / profitability issues in the midstream impacted its said quarter results.

At its October tender, Petra sold 696,801 carats for US$68.9 million. Petra noted that diamond prices on a like for like basis were down 8.8 percent vs Q4 FY 2015 in US Dollar terms. In excess of 96 percent by volume and 90 percent by value of the goods on the tender were sold. The balance of unsold parcels will either be offered to clients for sale at negotiated prices or will be rolled into the second tender. Petra plans to hold another tender in Q2 FY 2016, closing early December, with a further four tenders scheduled for H2 FY 2016.

Its October tender revealed trends in prices – prices for gem quality stones in the 2 to 5 carat range remained fairly stable; prices of gem quality stones in both the 3 to 6 grainer (0.75 carat to 1.5 carat) and the 5 to 10 carat size ranges were significantly softer with prices decreasing by 12 percent to 15 percent in both categories; and prices in the 2nd and 3rd tier quality goods remained fairly stable, whilst prices in the lowest quality assortments were weak.

The company’s diamond inventory as at 30 September 2015 was 1,181,822 carats (30 September 2014: 622,910 carats). Speaking on the company’s performance for the said quarter, Johan Dippenaar, Chief Executive Officer, mentioned, “Petra’s focus remains on the maintenance of a healthy balance sheet, the tight control of costs, and the successful roll-out of our expansion plans, which will deliver the first significant input from the higher quality production areas from H2 FY 2016 onwards. These measures will assist the company to withstand uncertain market conditions.”

The company’s production was up 1 percent to 842,796 carats, establishing what Johan Dippenaar also stated was a record quarterly performance for the Group. He said, “We are pleased to have made a strong start to the year, with record quarterly production for the Group, boding well for H1 FY 2016 production measured against guidance of 1.5 Mcts.” The increase in production was primarily attributed to increased production at Finsch, Koffiefontein and Kimberley Underground offset by reductions at Cullinan and Williamson. Petra remains on track for its full year production guidance of 3.3 – 3.4 Mcts for FY 2016.

The company expects a positive longer-term outlook for the rough diamond market underpinned by the continued growth in demand from developed and emerging markets, set against constrained supply due to the limited number of significant diamond mines worldwide.

Comments are closed.