A 57 per cent rise in carats sold underpinned an upsurge in first-half revenues for Petra Diamonds (PDL). And, although half-year earnings came up short of analyst expectations, Petra expects sales to accelerate during the second half due to the seasonal three-to-five split in its tender sales over the two halves.
The rise in sales allowed Petra to generate net cash flow of $25.3m (£16.8m) versus a corresponding outflow of $3.6m in 2011. However, profitability was held in check by a proportional rise in cost of sales, together with a $17.8m fair-value impairment linked to the sale of the non-core Fissure Mines. Petra had to contend with industrial unrest in South Africa, with increased labour costs at the Kimberley Underground mine, but the affect on mine cash costs was limited. All told, adjusted cash profits were up by a fifth to $32.6m.
Rough diamond production rose by 31 per cent to 1.25m carats, as Petra boosted capital expenditure by 62 per cent, while inventories stood at $45.4m ($38.1m in 2011). Petra's price guidance was broadly in line with the market during the period, and the group expects prices to firm up through 2013. It's worth noting that the first of five tender sales in the second half grossed $62.1m, or 40 per cent of first-half revenues.
Cannaccord Genuity expects 2013 adjusted EPS of 10¢ (from 8¢ in 2012).
| PETRA DIAMONDS (PDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 115.8p | MARKET VALUE: | £590m | |
| TOUCH: | 115-116p | 12-MONTH HIGH: | 189p | Low: 96p |
| DIVIDEND YIELD: | nil | PE RATIO: | 23 | |
| NET ASSET VALUE: | 120¢ | NET DEBT: | 16% | |
| Half-yearto 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 93 | -28.0 | -4.61 | nil |
| 2012 | 152 | 10.6 | 1.80 | nil |
| % change | +63 | - | - | - |
£1=$1.51 | ||||
