The economic slump has disrupted credit and equity markets worldwide and led to deterioration in the global economic environment, a general tightening of credit, and lower levels of liquidity.
As a result, some diamond producers have reduced mining activity or begun to stockpile inventory. "In the current economic environment, some of the company's customers may experience difficulty in paying for previously purchased products," the company said when announcing its financial results for the second fiscal quarter of 2009 ended November 30, 2008.
Net sales for the three and six months ended November 30, 2008 were $41.3 million and $119.6 million, respectively, as compared to $90.5 million and $193.1 million the previous year.
Polished diamond revenues for the three and six months ended November 30, 2008 were $20.2 million and $61.1 million respectively, as compared to $43.0 million and $76.9 million the previous periods.
Net sales were $41.3 million and $119.6 million, respectively, as compared to $90.5 million and $193.1 million."The recent global financial crisis and economic downturn has negatively impacted the sectors of the diamond and jewellery industry in which the company operates,'' said Leon Tempelsman, the president of Lazare Kaplan International.
"Diamond and diamond jewellery purchases are dependent on the availability of consumer discretionary spending. Uncertainties regarding future economic prospects and a decline in consumer confidence during the current fiscal quarter translated into lower purchases and sales by diamond producers, wholesalers and retailers in virtually all sectors of the diamond and jewellery industry," he said.
Rough diamond sales were $21.1 million and $58.5 million for the three and six months ended November 30, 2008, as compared to $47.5 million and $116.2 million for the comparable prior year periods. The decrease in rough diamond sales primarily reflects reduced sourcing activities as the Company sought to preserve liquidity and declined to purchase rough diamonds it considered overpriced in light of current market conditions.
Net income (loss) for the three and six month periods ended November 30, 2008 was $(3.7) million and $(2.9) million compared to $0.3 million and $0.7 million in the respective prior year periods.
Fully diluted earnings per share for the three and six-month periods ended November 30, 2008 are based on the weighted average number of shares outstanding of 8,252,679, as compared to 8,337,818 and 8,329,649 in the comparable periods under review.
Lazare Kaplan International Inc. sells its diamonds and jewellery products through a worldwide distribution network.
The Company is noted for its ideal cut diamonds, which it markets internationally under the brand name, Lazare Diamonds. Lazare Kaplan was a pioneer of Botswana's cutting and polishing industry in the early 1990s but sold its local operation in 1998 before coming back to the country last year.
In 2007, Lazare Kaplan Botswana, along with other 16 Sightholders, was granted a licence by government to cut and polish diamonds in the country.
The company is currently constructing a new cutting facility in Gaborone. (Additional reporting: Globe newswire)