UPDATE: De Beers CEO Stepping Down After Improved First Half

23rd Jul 2010 08:21

(Adds details, CEO comment.) 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 production to be curtailed. Production in the first half of this year more than doubled on year-ago levels and sales of rough diamonds was up more than 80% for the period as the company adjusted for a recovery that has been 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 Chief Executive for the last five years and with the company for 22 years. De Beers said Penny will step down in the coming months, and that until a successor is appointed Chief Financial Officer Stuart Brown and Chief Commercial Officer Bruce Cleaver would act as joint-CEOs. 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. 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. -By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; [email protected] (END) Dow Jones Newswires July 23, 2010 03:21 ET (07:21 GMT)