Harry Winston Diamond Corporation has a double niche in the diamond market. The company mines and sells rough diamonds as one business. The retail demand for diamonds especially in emerging economies like India and China is strong and results in good prices for rough diamonds. In the second quarter of 2011, Harry Winston producded .72 million carats of diamonds.
The other niche is selling luxury jewelry and timepieces. This segment is strong, especially in wedding rings, watches and designed jewelry. Japan, China and the Middle East have a strong demand and the United States currently has a lowered than usual demand for this kind of Jewelry. The luxury brand division had sales of $132.8 million. In the second quarter, this division generated an operating profit of approximately $6.8 million.
What I love about this business is that after mining diamonds from the earth, they are sold for sums that are artificially inflated because they are beautiful and desired. Mining metals probably has similar costs but yields less profit per ton.
The Harry Winston Diamond stock has been climbing slowly since 2009. Although it is down from 17 to 13 over the last 2 months, I believe that it will continue to rise, especially because overseas demand is strong, as described above. Also, according the charts, stock prices seem to go down a little during July and August.
The company is managed by Mr. Robert A. Gannicott who is chairman of the Board and CEO. Gannicott is a geologist who has worker in the mining industry for 35 years and has been with Harry Winston since it was founded in 1992. Frederic De Narp is also a CEO who brings experience in the jewlery-watch business having worked for Cartier for 18 years. He was the CEO of the North American division. Cyrille Baudet is Harry Winston’s CFO and has rich experience in auditing mining companies and also as a controller at Cartier.
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