Harry Winston Diamond Corporation Announces Third Quarter Fiscal 2009 Results
December 10 2008 - 5:15PM
PR Newswire (US)
TORONTO, Dec. 10 /PRNewswire-FirstCall/ -- Harry Winston Diamond
Corporation (TSX: HW; NYSE: HWD) today reported third quarter
results for the period ending October 31, 2008. The Company
recorded consolidated net earnings of $71.9 million, or $1.17 per
share, for the third quarter compared to a net loss of $7.4
million, or $0.13 per share, respectively, in the third quarter of
the prior year. Consolidated net earnings for the third quarter
included a $49.0 million net foreign exchange gain, or $0.80 per
share, as a result of the weakening of the Canadian dollar relative
to the US dollar, compared to a $40.6 million net foreign exchange
loss, or $0.70 per share, in the comparable quarter of the prior
year. Consolidated sales were $148.6 million for the third quarter
compared to $176.5 million for the comparable quarter of the prior
year, resulting in a 24% decrease in gross margin and a 35%
decrease in consolidated earnings from operations. "Current world
economic conditions present unprecedented challenges. It is in such
times that business fundamentals come to the fore. We own 40% of
one of the world's richest, and highest operating margin diamond
mines. It would remain profitable through diamond pricing that
would force the closure of the majority of the world's diamond
production. We also own 100% of one of the world's most prestigious
luxury brands. We are confident that assets of this quality can
carry us through the present turmoil" said Robert A. Gannicott,
Chairman and Chief Executive Officer. Thomas J. O'Neill, President
of Harry Winston Diamond Corporation added, "Sales growth in the US
and international markets offset continued soft sales in Japan
during the third quarter. Subsequently, on December 4, 2008 our
Paris salon experienced an armed robbery. Fortunately, our
employees are safe and we continue to cooperate fully with the
authorities' on-going investigation and with our insurance company.
Our strong brand and diversified global footprint have positioned
Harry Winston to withstand the intense economic challenges being
faced throughout the world." Earnings from operations for the
mining segment decreased 33% to $47.0 million compared to the
comparable quarter of the prior year. Rough diamond production for
the third calendar quarter was down 26% to 0.9 million carats
produced versus 1.25 million for the comparable quarter of the
prior year resulting from the continuing grade variation in the
A-154 South pipe, and the processing of a higher volume of low
grade mud-rich material from the top of the A-418 pipe. Mining
sales were down 26% to $90.7 million compared to $122.7 million in
the comparable quarter of the prior year due to reduced production.
Since September, rough diamond production has returned to normal
levels with grades in both A-154 South and A-418 returning to
levels consistent with the ore reserve. However, beginning in
October, the rough diamond market has become subdued as the diamond
distribution chain seeks to deleverage by not replenishing
inventories. The retail segment recorded an 8% increase in sales to
$57.9 million, with a loss from operations of $4.0 million compared
to a loss from operations of $3.6 million in the comparable quarter
of the prior year. Retail segment SG&A as a percentage of sales
remained consistent with the comparable quarter of the prior year
at 53%. Third Quarter Fiscal 2009 Financial Highlights (US$ in
millions except Earnings per Share amounts)
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Three months Three months Nine months Nine months ended ended ended
ended Oct. 31, Oct. 31, Oct. 31, Oct. 31, 2008 2007 2008 2007
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Sales 148.6 176.5 490.8 491.1
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Earnings from operations 42.9 66.3 156.0 158.6
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Net earnings 71.9 (7.4) 143.1 16.0
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Earnings per share $1.17 $(0.13) $2.35 $0.27
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Dividend Announcement Harry Winston Diamond Corporation is pleased
to declare an eligible quarterly dividend payment of US$0.05 per
share. Shareholders of record at the close of business on January
15, 2009, will be entitled to receive payment of this dividend on
January 29, 2009. Conference Call and Webcast As previously
announced, Harry Winston Diamond Corporation will host a conference
call for analysts, investors and other interested parties on
Thursday, December 11, beginning at 09:00AM (EST). Listeners may
access a live broadcast of the conference call on the company's
investor relations web site at http://investor.harrywinston.com/ or
by dialing 866-761-0749 within North America or 617-614-2707 from
international locations and entering passcode 94625715. An online
archive of the broadcast will be available by accessing the
company's investor relations web site at
http://investor.harrywinston.com/. A telephone replay of the call
will be available starting at noon through 11:00PM (EST),
Wednesday, December 24, 2008, by dialing 888-286-8010 within North
America or 617-801-6888 from international locations and entering
passcode 93471024. Information in this news release that is not
current or historical factual information may constitute
forward-looking information or statements within the meaning of
applicable securities laws. Implicit in this information,
particularly in respect of statements as to future operating
results and economic performance of Harry Winston Diamond
Corporation and statements about the Diavik Diamond Mine, are
assumptions regarding world economic conditions, projected revenue
and expenses, diamond prices, construction timelines and mine
operating plans and budgets, ore grades and the Canadian/US dollar
exchange rate. These assumptions, although considered reasonable by
Harry Winston Diamond Corporation at the time of preparation, may
prove to be incorrect. Forward-looking information is subject to
certain factors, including risks and uncertainties, which could
cause actual results to differ materially from what we currently
expect. These factors include, among other things, the uncertain
nature of mining and mine development activities, risks associated
with underground construction activities, risks associated with
joint venture operations, risks associated with the remote location
of the Diavik Diamond Mine site, risks associated with regulatory
and financing requirements, fluctuations in diamond prices, changes
in world economic conditions, increased competition from other
luxury goods retailers, changes in consumer preferences and tastes
in jewelry, and the risk of continued fluctuations in the
Canadian/US dollar exchange rate. About Harry Winston Diamond
Corporation Harry Winston Diamond Corporation (TSX: HW; NYSE: HWD)
is a specialist diamond enterprise with assets in the mining and
retail segments of the diamond industry. The company supplies rough
diamonds to the global market from its 40% interest in the Diavik
Diamond Mine, located in Canada's Northwest Territories. The
company's retail division, Harry Winston, Inc., is a premier
jewelry and timepiece retailer with salons in key locations
including New York, Paris, London, Beijing, Tokyo and Beverly
Hills. For more information, please go to
http://www.harrywinston.com/ or for investor information, visit
investor.harrywinston.com. DATASOURCE: Harry Winston Diamond
Corporation CONTACT: Investor Relations - (416) 362-2237 ext 290 or
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