DIAMOND PROFITS FAIL
It occasions no special surprise that De Beers Consolidated Mines should have experienced a sharp setback in 1938. The diamond trade is obviously vulnerable to trade depression, and especially so to a depression in which capital values have been disproportionately reduced. Proceeds from the sale of diamonds fell from £2,536,603 in 1937 to £656,473 in 1938. The company was able to draw only £2,149 profit from investment transactions against 04,865, but owing to its highly profitable investment in African Explosives and Industries the interest and dividend revenue was more than maintained. After charging all expenses De Beers have a net profit for 1938 of £637,588, compared with L2,484,260 in 1937. Six months' dividend on the preference shares has already been announced, but there is to be no further payment on either class of capital leaving, after the provision of £200,000 for development expenditure, £762,352 to go forward compared with £732,764 brought in. In the previous year 21 years' preference dividend and 30 per cent. on the Deferred shares was paid.
De Beers statement, grim though it is, is relieved by the directors' report that diamond sales in the second six months of the year showed considerable improvement, and that busi- ness for 1939 has opened satisfactorily. They hope also to protect the company against the more violent changes in the state of trade by means of the share transaction announced last December, the effect of which is that for the future the De Beers group will hold the whole capital of the Diamond Cor- poration, and a 50 per cent, interest in the Diamond Trading Company. It is explained that the Diamond Corporation has arranged to purchase the production of all the important diamond producers outside South Africa and South West Africa, and continues to receive priority for its sales. This should tend to increase De Beers' revenue in years when the volume of trade is small.
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