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Harry Winston announces Q2 fiscal 2009 results

10
Sep '08
Harry Winston Diamond Corporation reported second quarter results for the period ending July 31, 2008. The Company recorded an increase in consolidated sales for the quarter of 7%, generating a 23% increase in gross margin and a 30% increase in consolidated earnings from operations compared to the results of the second quarter of the prior year.

Consolidated quarterly sales totalled $186.1Â million with earnings from operations of $73.4 million compared to $173.3 million and $56.2 million, respectively, for the comparable quarter of the prior year.

Net earnings were $49.9 million, or $0.81 per share, compared to net earnings of $20.1 million, or $0.34 per share, respectively, in the second quarter of the prior year. Net earnings for the comparable quarter of the prior year were reduced by a net $11.8 million foreign exchange loss, or $0.20Â per share, as a result of the strengthening of the Canadian dollar relative to the US dollar, compared to a net $5.3 million foreign exchange gain in the current quarter, or $0.09 per share.

"The international cachet of the Harry Winston brand has proven its strength despite difficult trading conditions in both the US and Japanese markets. This expanded market place has also delivered strong pricing for our rough diamond sales in the face of lower than anticipated production from the Diavik Mine as we work through the transition from one open pit to the next and the uncertainty in production forecasting that this entails.

The construction program to develop the underground portions of the ore bodies that add lifetime and operational security to the project is well advanced and comfortably within schedule and cost budgets," said Robert A. Gannicott, Chairman and Chief Executive Officer.

Thomas J. O'Neill, President of Harry Winston Diamond Corporation added, "Our businesses in Asia, Europe and the Middle East have been sufficient to offset the general market softness in the US and Japan; this contributed to our strong retail finish for second quarter. Together with solid results from the first quarter, the first half of the year has put us on firm footing into the second half of the year."

Earnings from operations for the mining segment increased 27% to $67.5Â million compared to the comparable quarter of the prior year. Rough diamond production for the second calendar quarter was down 23% to 1.0 million carats produced versus 1.3 million for the comparable quarter of the prior year resulting from the continuing grade variation in the A-154 South pipe and the initial stripping of low grade A-418 ore mixed with waste overburden material. Mining sales of $105.0 million remained at a consistent level with the prior year as higher diamond prices compensated for reduced volume.

The retail segment recorded a 19% increase in sales to $81.1 million with earnings from operations of $5.9 million compared to earnings from operations of $3.2 million in the comparable quarter of the prior year. Retail segment SG&A as a percentage of sales decreased to 42% in the second quarter from 43% in the comparable quarter of the prior year.

Harry Winston Diamond Corporation


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