Debmarine Namibia’s earnings down by 53% to N$2.2 billion
Debmarine Namibia’s revenue decreased by 22% to N$7 billion from N$8.9 billion in 2018, as a result of decreased production, consumer demand challenges and price, offset slightly by the weakening of the Namibia Dollar against the US Dollar, the company’s Chief Financial Officer Willy Mertens said recently.
The company’s underlying earnings before interest tax, depreciation and amortisation decreased by 53% to N$2.2 billion due to the reduction in revenue and cost pressures.
“Following a period of mild growth through 2017 and 2018, the global diamond industry has struggled in 2019. A range of challenges for rough diamond trading conditions impacted our financial performance; in late 2018, stock market volatility and US-China trade tensions resulted in lower than expected holiday retail sales, which led to higher than anticipated stock levels in the midstream at the start of 2019,” Mertens said.
He however added that the long-term outlook for global diamond demand remains positive, with significant growth prospects in emerging markets and opportunities to further grow new segments in existing markets.
“The work that we are embarking up around Natural Diamond Initiatives becomes especially key during this times to build confidence and trust in the industry,” Mertens said.
During 2019, Debmarine’s capital expenditure increased 65% to N$1.4 billion driven largely by the AMV3 and the company expects capital expenditure to peak in 2020 and 2021 as they progress with the AMV3 project.
“The first 20% of the AMV3 project cost is coming out of our cash reserves – we have not yet drawn down on the AMV3 funding,” Mertens noted.
Last year, five banks sealed a deal worth N$5.6 billion to fund Debmarine’s new N$7 billion AMV3 vessel being constructed by global shipbuilder Damen in Romania. The N$7 billion vessel is expected to create more than 161 new jobs alongside Debmarine Namibia’s current workforce of 975 employees and contribute additional 500,000 carats annually to Debmarine Namibia’s production, an increase of approximately 35% on current production.
Mertens noted although total debt reduced with the repayment of the SS Nujoma loan, net debt increased due to reduced cash, adding that return on assets on an underlying earnings before interest tax, depreciation and amortisation level reduced to 27% with gearing levels reducing to 20% with the repayment of the existing SS Nujoma debt.
Debmarine directly contributed N$19.3 billion to the National Treasury over the past 6 years (2014- 2019).