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De Beers CEO Penny Quits as Biggest Diamond Miner Posts Record Sales Jump
De Beers, the world’s largest diamond producer, said Chief Executive Officer Gareth Penny will step down later this year after getting the company “back on its feet” with its biggest jump in half-year sales.
Penny, 48, has headed De Beers for the past five years and will leave after leading the company through a global recession that slashed demand for diamonds, and the company’s “subsequent recovery,” De Beers said in an earnings statement today.
“I feel it’s the right time” to leave, he said by phone from London. “We’ve come out of a difficult period.” Penny hasn’t decided what he plans to do and will continue as CEO until the end of September, before working part-time until the end of the year.
Penny is a “pretty impressive character” and his resignation “will overshadow the results,” said Peter Davey, head of mining research at Ambrian Capital Plc. “Why let him step down if you haven’t got a replacement? It’s not an ideal situation,” he said by phone from London.
Chief Financial Officer Stuart Brown and Chief Commercial Officer Bruce Cleaver will act as joint-CEOs while De Beers finds a permanent successor, it said.
Earlier, De Beers, which produces about 40 percent of the world’s diamonds, said first-half sales of unpolished and uncut stones climbed 84 percent to $2.6 billion, boosted by improved demand from Asia.
‘Measured Optimism’
Output more than doubled to 15.4 million carats as the company reopened mines in Botswana and Namibia that were shuttered as gem consumption slumped amid the recession. Sales were helped by improved retail demand, particularly in India and China, and also in the U.S., the largest market, De Beers said.
“It’s a good result and in line with expectations,” Ambrian’s Davey said.
While rough diamond prices have risen in the past year, returning to levels last seen in June 2008, the global economic climate remains fragile, especially in the U.S., Japan and Europe, De Beers said. “We look to the remainder of 2010 with caution and measured optimism,” it said.
U.S. retail sales are growing at the fastest pace in four years, driven by an 8 percent jump at luxury chains this year, the International Council of Shopping Centers said on July 7. The U.S. accounts for half of the world’s diamond demand.
With demand recovering, De Beers expects to produce between 30 million carats and 32 million carats this year, rising to about 40 million carats next year, Penny said.
De Beers, which traces its history back to 1888, is 45 percent-owned by Anglo American Plc and 40 percent by the Oppenheimer family. Botswana controls the remaining 15 percent.
To contact the reporter on this story: Ron Derby in Johannesburg at rderby1@bloomberg.net
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