Gemfields' profits soar as production growth continues

For the year ended 30 June, revenue increased by 12.6% to $193.1m, compared to the previous year, which resulted in a 91% rise in profit after tax of $23.5m.

Earnings before interest, tax, depreciation and amortisation rose 7.7% to $69.4m, while there was a 90% increase in post-tax profit year of $23.5m.

Though the cost of gemstones and Fabergé inventory rose 6% to $107.2m, Gemfields almost doubled operating cash flow to $64.1m so by the end of June had cash of $41.5m, a 48% increase, and had cut net debt to $10.00m from $16.7m.

Rough emerald and beryl production was maintained at 30m carats, though production of rough ruby and corundum rose 22.6% to 10.3m carats, which exceeded guidance.

Global imports of emeralds, rubies and sapphires rose 13% to $5.9bn.

Chief executive Ian Harebottle said the company’s strategy is to grow production over time from the Kagem and Montepuez mine, increase consumer demand and achieve higher prices for its rough gemstones year-on-year.

He added: “The company continues to see opportunities in new and existing markets for further price escalation. For the coming financial year Gemfields is targeting four emerald and beryl, two high and two commercial quality, auctions and two mixed quality ruby and corundum auctions.

“In addition, to meet the rising demand for coloured gemstones, the company secured financing in the year to realise its expansion programme which will see higher production at both the Kagem and Montepuez operations over the next three years."

Elsewhere, management continue to work on the acquisition of the Coscuez emerald mine in Columbia, while exploration has begun at the company’s greenfield properties in Ethiopia and a deal is underway to introduce sapphires from Sri Lanka into the supply chain.

Shares in Gemfields were up 2.22% to 46p at 0849 BST on Monday.