3rd UPDATE: De Beers CEO Stepping Down After Improved 1H

23rd Jul 2010 15:21

(Adds comment from De Beers on CEO succession.) By Robb M. Stewart Of DOW JONES NEWSWIRES JOHANNESBURG (Dow Jones)--The chief executive officer of diamond producer De Beers SA said Friday he is stepping down after helping guide the company through the global recession that ate into demand for luxury goods and forced mining output to be curtailed. Production in the first half of this year more than doubled on year-ago levels and sales of rough diamonds were up more than 80% for the period as the company adjusted for a recovery driven by consumers in India and China, the Johannesburg-headquartered company said. "Having seen the business through the recession...it is the right time for me to move on," said Gareth Penny, who has been CEO for the last five years and with the company for 22 years. Penny, 47, said his age and the company's much strengthened position after it bolstered its balance sheet and cut costs played a role in his decision to resign. He said he plans to stay on full time through the third quarter, and then take on a part-time role in the final three months of 2010 before spending more time with his wife and children, aged 10 and 12. "If I leave it longer, then I think that window closes for me," Penny said in an interview of what he sees as a second leg to his career. De Beers has appointed Chief Financial Officer Stuart Brown and Chief Commercial Officer Bruce Cleaver as acting joint-CEOs during the search for a successor to Penny. Founded in 1888 and taken private in 2001, De Beers produces and markets some 40% of the world's rough diamonds by value. It is 45% owned by Anglo American PLC (AAUK), 40% by the Oppenheimer family and 15% by the government of Botswana. A spokeswoman for De Beers said the Oppenheimer family as managing shareholders will conduct a search for candidates to succeed Penny both from within and outside the company, but no one has been lined up as yet. Any candidate would have to be approved by the other shareholders, she said. Production for the first six months of the year rose to 15.4 million carats from 6.6 million in the same period last year. De Beers said sales of rough stones by its marketing arm increased 84% to $2.6 billion as the diamond trade rebuilt stock levels and prices improved. Penny said the company remains on track to produce between 30 million and 32 million carats this year, and to increase that to about 40 million in 2011. However, he cautioned the global economy remains fragile. "This time last year, in the midst of the global recession, we transformed our business--taking short-term pain for long-term gain," said De Beers Chairman Nicky Oppenheimer in a statement. "One year later, our results for the first half of 2010 show the success we've had in managing costs, creating operating efficiencies and improving our balance sheet." De Beers said its half-year net earnings improved to $255 million from $3 million a year earlier, while total sales climbed to $2.98 billion from $1.71 billion. The company in March received a $1 billion injection from its shareholders to pay down debt and strengthen its balance sheet, and refinanced its borrowings with its lenders with debt facilities extended to August 2013. Penny said prices for uncut, unpolished diamonds have risen 19% this year after recovering in the last half of 2009, and are now back to about mid-2008 levels. -By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; [email protected] (END) Dow Jones Newswires July 23, 2010 10:21 ET (14:21 GMT)