Join our community of smart investors

A polished performance from Petra

RESULTS: Petra Diamonds has turned 2012's half-year earnings loss into a profit by boosting both production and sales.
February 20, 2014

A strengthening market for rough diamonds enabled Petra Diamonds (PDL) to reverse 2012's half-year net earnings loss, while bumping up operating profits (ex impairments) to $42.3m (£25.3m) from just $3.5m last time around.

IC TIP: Hold at 161p

Comparative cash flows more then trebled during the period, easily covering Petra's $85.3m in capital commitments. And although Petra's projected capital outlay is expected to peak next year, the company is confident that its funding headroom will continue to expand. Production and sales were both up by around a third, to 1.6m and 1.4m carats respectively. Petra's second-half sales are expected to be "significantly higher", as it will hold an additional tender sale during the period. The company will also benefit from the $25.6m generated from the recent sale of a 29.6 carat blue diamond mined at its Cullinan mine to US jeweller Cora International.

Petra remains on track to meet full-year guidance of 3m carats for fiscal 2014, after which the next target is 5m carats by 2019. The miner's operating margins should rise substantially over the next half decade, as it makes the transition from mature mining blocks to virgin bodies of ore.

PETRA DIAMONDS (PDL)
ORD PRICE:161pMARKET VALUE:£824m
TOUCH:160-161p12-MONTH HIGH:161pLow: 100p
DIVIDEND YIELD:nilPE RATIO:21
NET ASSET VALUE:111¢NET DEBT:18%

Half-year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
2012 (restated)156-14.9-1.9nil
201318642.24.7nil
% change+19---

Ex-div: -

Payment: -

£1=$1.67