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Harry Winston Diamond Corporation Announces Second Quarter Fiscal 2010 Results

by NationTalk on September 11, 2009335 Views

TORONTO, Sept. 10 – Harry Winston Diamond Corporation (TSX: HW, NYSE: HWD) (the “Company”) today reported second quarter results for the period ended July 31, 2009. The Company recorded a consolidated net loss of $24.5 million or $0.32 per share for the quarter, compared to net earnings of $49.9 million or $0.81 per share in the second quarter of the prior year. The consolidated net loss for the quarter was significantly impacted by a net foreign exchange loss primarily on future income tax liabilities of $25.3 million or $0.33 per share, compared to a net foreign exchange gain of $5.3 million or $0.09 per share in the comparable quarter of the prior year.Robert Gannicott, Chairman and Chief Executive Officer commented: “During this quarter the diamond industry as a whole adjusted production to the curtailed demand in the intermediate part of the diamond pipeline due to the world economic conditions. Rough diamond prices increased substantially during the quarter with our own pricing ending at 50% above the low point in the first quarter. This improving trend has continued into the third quarter. Although retail sales remained below profitable levels, we have seen a 9% increase in transactions worldwide compared to the prior quarter led by increases in the Far East, including Japan. Sales have also edged up month to month during the quarter suggesting a shift in momentum.”

Consolidated sales were $94.8 million for the quarter compared to $186.1 million for the comparable quarter of the prior year, resulting in a 75% decrease in gross margin and a loss from operations of $3.9 million.

The mining segment recorded sales of $46.0 million, a 56% decrease from $105.0 million in the comparable quarter of the prior year. The decrease in sales resulted from a combination of a 36% decrease in rough diamond prices and a 31% decrease in volume of carats sold in the second quarter. Rough diamond production for the calendar quarter was 0.6 million carats, significantly lower than the comparable quarter of the prior year due to a planned decrease in ore production reflecting the softness in the rough diamond market. Earnings from operations for the quarter were $1.7 million compared to $67.5 million for the comparable quarter of the prior year.

The retail segment recorded a 40% decrease in sales to $48.8 million, with a loss from operations of $5.6 million compared to earnings from operations of $5.9 million in the second quarter of the prior year. Retail segment selling, general and administrative expenses decreased by $5.8 million from $34.0 million in the comparable quarter of the prior year. In addition, selling, general and administrative expenses decreased by $2.0 million from the first quarter of this year.

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