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Harry Winston Diamond Corporation Reports Fiscal 2013 Second Quarter Results (1 Of 2)

Stocks in this article: HW HWD

TORONTO, September 6, 2012 /PRNewswire/ --

Harry Winston Diamond Corporation (TSX: HW, NYSE:HWD) (the "Company") today announced its second quarter Fiscal 2013 results for the quarter ending July 31, 2012.

Robert Gannicott, Chairman and Chief Executive Officer stated, "This quarter has seen transaction numbers and margins grow in our luxury goods segment even as we have withheld rough diamonds, from a soft diamond market, rather than sell at depressed prices."

Second Quarter Highlights:

  • Consolidated sales decreased 20% to $176.9 million for the second quarter compared to $222.4 million for the comparable quarter of the prior year.
  • Operating profit was $16.4 million compared to $23.1 million in the comparable quarter of the prior year.
  • EBITDA decreased 24% to $33.4 million compared to $43.8 million in the comparable quarter of the prior year.
  • For the mining segment rough diamond sales for the quarter decreased 31% to $61.5 million, versus $89.6 million in the comparable quarter of the prior year.
  • The decrease in sales resulted from a combination of a 24% decrease in volume of carats sold during the quarter and a 10% decrease in achieved rough diamond prices.
    • The 24% decrease in the quantity of carats sold was primarily the result of the Company's decision to hold some inventory until stability returns to the rough diamond market. Had the Company sold only the last production shipped for the second quarter, the estimated achieved price would have been approximately $104 per carat based on the prices achieved in the March/ April 2012 sale adjusted down by 14% to reflect current market conditions.
    • The Company sold approximately 0.43 million carats for an average price of $142 per carat compared to approximately 0.57 million carats for an average price per carat of $157 in the comparable quarter of the prior year. The 10% decrease in the Company's achieved average rough diamond prices in the second quarter resulted from a decrease in the market price for rough diamonds from the peak achieved in July 2011, partially offset by the sale of the higher priced goods held back by the Company in the first quarter of fiscal 2013 due to an observed imbalance in the rough and polished diamond prices for these goods during that period.
  • The Company had 0.7 million carats of rough diamond inventory with an estimated current market value of approximately $90 million at July 31, 2012, of which approximately $65 million represents inventory available for sale.
  • Rough diamond production for the calendar quarter ended July 31, 2012 was 0.72 million carats (40% basis), which was consistent with the comparable period of the prior year.
  • Luxury brand segment sales decreased 13% (11% at constant exchange rates) to $115.4 million compared to $132.8 million in the comparable quarter of the prior year.
  • Excluding high-value transactions from both periods, sales increased 25% in the second quarter versus the comparable quarter in the prior year.
  • Operating profit for the luxury brand segment increased 16% to $8.0 million in the second quarter compared to $6.9 million in the comparable quarter of the prior year.
  • The increase in operating profit was primarily driven by positive product mix and a greater portion of high-value transactions in the comparable quarter of the prior year that generated lower-than-average gross margins.
  • On August 30, 2012, the luxury brand segment refinanced its senior secured revolving credit facility by entering into a new secured five-year credit agreement with a consortium of banks led by Standard Chartered Bank establishing a $260 million facility for revolving credit loans. The facility has a maturity date of August 30, 2017.
  • Consolidated net profit attributable to shareholders for the second quarter was $4.8 million or $0.06 per share compared to net profit attributable to shareholders of $10.0
  • million or $0.12 per share in the comparable quarter of the prior year.

Fiscal 2013 Second Quarter Financial Summary

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