Petra Diamonds witnessed a subdued market response on Tuesday as its shares remained largely unchanged following a lukewarm indication of full-year sales.
The diamond producer is grappling with the challenges posed by declining diamond prices, despite managing to boost the volume of carats sold. However, a decrease in average prices led to a dip in revenue over the full-year period.
In 2024, Petra sold 2,450,613 carats, reflecting an increase from 2,237,010 carats sold in 2023. Nonetheless, the average selling prices saw a decline from $141 per carat in 2023 to $116 per carat in 2024. Consequently, total sales contracted from $316 million to $285 million.
Mark Crouch, an analyst at investment platform eToro, remarked on the challenges Petra Diamonds faces, stating, “It’s been a tough start to the year for Petra Diamond’s shareholders. With the share price plummeting by 40%, shareholders will have been eager for some good news in this morning’s earnings update.”
Crouch highlighted the impact of lower production and subdued diamond prices, which contributed to the decline in sales and profits compared to the previous year.
Petra Diamonds, known for its ownership of one of the world’s largest producing diamond mines, has encountered significant headwinds in an increasingly challenging industry. The global lockdowns initially spurred demand for diamonds, but this demand has since waned, leading to a drop in prices. Additionally, the rise in popularity of lab-grown diamonds, which are identical to mined diamonds but more affordable, has added to the industry’s challenges.
Crouch noted that lab-grown diamonds offer consumers reassurance regarding ethical sourcing. As their popularity grows, Petra Diamonds will need to adapt to remain competitive in the evolving market landscape.
