Gemfields earnings down as company spreads its income

A better-planned spread of income saw revenues and earnings drop significantly at Gemfields in the six months to 31 December, though the company remained confident in making up for it in the latter half of the financial year.

The AIM-traded company saw revenue decline 9.1% over the same period a year earlier, to $94m (£66.77m), from $103.4m.

EBITDA dropped 42.3% to $35.6m, from $61.7m, with the company attributing the change to a more equally planned auction mix between the first and second halves of the 2016 financial year, whereas a significant part of revenue and margin was achieved in the first half of the 2015 financial year.

Net profit after tax was down 64.7% to $8.2m, from $23.2m.

Gemfields had cash of $24.9m on 31 December, down from $28m on 30 June 2015. Its cost of inventory at hand was $107m, excluding fuel and other consumables, up 5.8% from $101.1m on 30 June.

"The first six months of the financial year has seen steady demand for our emeralds and rubies being well supported by Fabergé's role as a change agent within the luxury sector, the very positive production results delivered at our mining operations in Zambia and Mozambique, and the ongoing progress of our numerous expansion initiatives," said Gemfields CEO Ian Harebottle.

"The company is pleased to maintain its production target for the 2016 financial year of 25 to 30 million carats for rough emerald and beryl and 8 million carats for rough ruby and corundum and remains confident in the integrity of the coloured gemstone sector as we look forward to hosting at least three further auctions during the second half of this financial year," he added.

Gemfields was now looking to completing is acquisition of a controlling interest in the Coscuez Emerald Mine in Colombia, following the binding and conditional agreement announced in September.

It anticipated this would take place shortly, followed by a plan for exploration and development of the project in the remaining half of the year.

The company said it was retaining its production forecast of 25 to 30 million carats for rough emerald and beryl, and eight million carats of ruby and corundum for 2016.