Thursday, September 8, 2011

Harry Winston Q2 profit slips to US$10M; revenues up US$68.7M

Harry Winston Diamond Corp. (TSX:HW) is predicting continuing strong global demand and prices even as the diamond miner and luxury jewelry retailer saw sharply reduced profits in the second quarter.

Toronto-based Harry Winston reported after markets closed Wednesday that net earnings attributable to shareholders in the three months ended July 31 were US$10 million or 12 cents per share, compared with US$13 million or 17 cents in the same quarter a year earlier.

Revenue in the company's fiscal 2012 second quarter were US$222.4 million, up from $153.7 million, mainly as a result of sparkling results in it luxury brand retail segment.

Mining revenue totalled US$89.6 million in the quarter, up from US$86.8 million, while the luxury segment produced revenues of US$132.8 million, almost double the US$66.9 million generated in the year-earlier period.

"Global retail demand, especially in the emerging economies such as China and India, has delivered both strong retail sales growth and strong rough diamond prices," company chairman and CEO Robert Gannicott said in a release accompanying the results.

"Seeing through the effect of a small number of high-value, lower margin sales, our own jewelry and timepiece business shows solid growth in both sales and margin in the core bridal, timepiece and designed jewelry segments," Gannicott added.

Meanwhile, he said the market price increase in rough diamonds had "more than compensated" for two complete sales versus three in the comparable prior-year quarter as well as the lower quality diamonds mined.

"Looking forward we continue to see strong global jewelry and timepiece demand from China, while Japan and the Middle East improve and the U.S. remains subdued," Gannicott said.

"On this basis we expect to continue to grow our own jewelry and timepiece business despite challenging economic conditions in the U.S. and Europe."

Although the company does not predict further near-term price increases in the rough diamond market, "we do see our own rough diamond sales price already improving as we produce more from the higher valued A-154 South and North pipes," Gannicott said.

Harry Winston supplies rough diamonds to the global market from its 40 per cent ownership interest in the Diavik diamond mine in the Norhwest Territories. while its luxury segment operates salons in key locations in major cities around the world.

On the Toronto Stock Exchange, Harry Winston stock closed down 23 cents at $14.80 Wednesday.

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