Despite an extremely challenging year for the Namibian economy coupled with the introduction of synthetic diamonds, Namib Desert Diamonds (Namdia) outperformed its target by an increase of 17% in gross profit compared to the previous financial year.
This enabled Namdia to declare its first dividend to the government, as its sole shareholder, to the tune of N$50 million. These details are contained in Namdia’s 2018/19 annual report tabled in parliament on Tuesday.
Namdia’s positive financial performance is attributed to a well-executed strategy that focused on revenue maximisation of its sales strategy and robust internal processes and procedures combined with the company’s positioning and branding in the global market.
According to the annual report, Namdia conducted 10 sales during the period under review, totalling 304 033 carats for an average of US$552.58 per carat. Since inception it bought and sold 758 453 carats, averaging 27 088 carats per cycle.
Namdia’s full-year profit after-tax amounted to N$161.9 million, up 16% from the prior year’s N$139 million. Increased sales of 17% due to increased Namdeb Holdings Mining output resulted in profit before tax of N$238.6 million while Namdia paid export levies of N$22.6 million during the year under review.
According to Namdia’s chief executive officer, Kennedy Hamutenya, the 2018/19 financial year was a good one in terms of operational and financial performance. The company’s cash position also continues to strengthen as clients paid premium prices for the precious stones.
“During the period under review we have been able to use part of our own cash reserves to buy rough diamonds when our allocation of rough diamonds entitlement from the NDTC was unusually high due to disproportionate and unusually high production from the mine,” said Hamutenya.
He added that the diamond industry has moved from a relatively stable environment to a highly uncertain one. On 29 May 2018, De Beers launched a laboratory-grown diamond jewellery brand known as Lightbox Jewellery. It is anticipated that the next few years will see an increase in laboratory-grown diamonds for jewellery purposes. This is expected to have serious consequences for players in the natural diamond industry.
Meanwhile, Namdia chairperson, Shakespeare Masiza, highlighted that it has been a successful year for the company with several important milestones. “Namdia remains well-positioned to continue to deliver sustainable and superior selling prices on behalf of its shareholders. These figures illustrate the successful implementation of strategies to achieve excellence through continuous improvement of our internal processes,” read the chairman’s report.