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Gemfields posts record full-year revenue, higher Ebitda

31st March 2023

By: Marleny Arnoldi

Deputy Editor Online

     

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Dual-listed Gemfields generated record revenue of $341-million for the year ended December 31, which marks a 32% year-on-year increase.

The company also posted a 25% year-on-year increase in earnings before interest, taxes, depreciation and amortisation (Ebitda) to $166-million for the year.

Chairperson Martin Tolcher says a full year of operations in 2022, following disrupted operations in 2020 and 2021, and heightened prices at auctions for rough gemstones led to the Kagem emerald mine, the Montepuez ruby mine and the Fabergé luxury brand achieving record revenues.

The board has, therefore, approved a strong final dividend of $35-million, or $0.029 apiece, which follows on a $20-million maiden dividend paid for the 2021 financial year and an interim dividend of $15-million for the first half of the 2022 financial year.

Profit after tax amounted to $74.2-million, against a profit after tax of just under $65-million in 2021 – a 14% year-on-year increase.

Cash generated from operating activities was $119-million, compared with $98-million in cash generated in 2021.

Despite the good 2022 performance, Tolcher cautions that if prices of rough gemstones this year turn out to be lower and not enough to offset high inflation and thereby cost increases, it will be difficult for Gemfields to replicate the outstanding performance.

He adds that the group’s strong rate of cash generation and healthy financial position, nonetheless, place the company in good stead for a strong year in 2023.

The Kagem mine, in Zambia, generated auction revenues of $149-million in 2022, which included Gemfields’ highest-ever single sale – the 37 kg Kafubu Cluster.

Gemfields says that, while higher inflation levels are increasing the cost of mining considerably, particularly for fuel, the company continues to invest in its mining fleet and infrastructure to seek efficiencies.

The Montepuez mine generated $167-million of auction revenue in the year under review, amid the insurgency in northern Mozambique and its impact on people and businesses of the Cabo Delgado province.

Gemfields is planning to build a second processing plant at the Montepuez mine, for which design work has largely been completed. The finalisation of a tender process is expected to be completed in the first half of this year.

Moreover, the company’s luxury jewellery brand, Fabergé, continues to generate strong sales despite a softer end to 2022, owing to a weaker global economy and wobbles in the banking sector in some countries.

The brand is working towards cash flow profitability and ended the year with its lowest cash draw ever from Gemfields. Fabergé reported a loss of $3.1-million in the reporting year.

MARKET

CEO Sean Gilbertson says the coloured gemstones market has seen strong demand ever since the height of the Covid-19 pandemic, with prices paid for uncut emeralds and rubies reaching remarkable levels during the first half of 2022, in particular.

He adds that, with fears over a global recession, demand and therefore prices may dip this year, but Gemfields will continue to pursue its reputation for offering higher-value gemstones than most, owing to the company’s operating philosophy and the difference these purchases make to communities and countries.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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