Gemfields, a prominent miner and marketer of coloured gemstones, appears to be on track to fulfill the cautionary note sounded in its 2022 annual report, signaling a challenge in replicating its stellar financial performance in 2023. While demand for coloured gemstones remains robust, the global luxury goods market is showing signs of deceleration, as reported by Euromonitor in July.
In a recent trading statement, Gemfields announced that it anticipates reporting adjusted headline earnings for the six months ending June at US1.9 cents per share. This is a notable decrease from the US4.1 cents reported for the same period last year. In terms of the South African rand, this equates to 35.1 cents per share, compared to 62.6 cents in 2022. It’s worth noting that the average number of shares in circulation during this period increased slightly, with 1.215 million shares compared to 1.177 million shares in the previous year.
The decline in earnings is partly attributed to a substantial write-down of $13.3 million to $18.7 million on Gemfields’ investment in Sedibelo Resources platinum. This adjustment reflects lower public valuations for similar platinum group metals (PGM) companies and Sedibelo’s diminished operational and financial performance.
While Gemfields’ two operational gemstone mines, Kagem and MRM, reported lower revenues, the demand for commercial quality emeralds and mixed-quality rubies remains resilient, the company noted. It is important to mention that 2022 witnessed an exceptional surge in gemstone prices. However, Gemfields recently announced the cancellation of its scheduled November auction of emeralds from Kagem due to a general decline in the mine’s production in recent months. The available offerings will be carried over to the 2024 auction.
Gemfields’ renowned Fabergé brand also reported a drop in revenues, declining from $9.5 million to $8.4 million for the same period last year, attributable to a softer performance in the luxury goods market.
The full report covering the six months ending in June will be unveiled on Friday, 22 September. Following the trading statement, Gemfields’ shares experienced a modest uptick of 1.7% to reach 15p in London.
