DTC Sight Five: “They Are Listening to Us!”
June 15, 06
In what some might term a revolution, De Beers Managing Director Gareth Penny told Sightholders they would not receive any ex-plan (goods beyond their ITO - Intention to Offer), nor should they take any boxes they don’t think they are profitable.
“We hear you clearly,” Penny said during a seminar on Wednesday. To prove it, Penny made three key statements: there is no intention to supply ex-plan during the second half of the year; Sightholders should leave boxes on the table and not lose money on them; and, De Beers will ensure that they remain competitive.
The last point was understood to mean that the Diamond Trading Company (DTC), will lower prices, or at least improve assortments. During the current Sight, assortments were not improved, to the disappointment of many.
Reaction to these three points was greeted enthusiastically by Sightholders. “They are listening to us,” said one, another, agreeing with Penny's statement that, “We are all in this together”.
Sightholders have been in a tight position recently. Rough prices are high, polished prices are enabling just a small margin, bank interest rates are increasing, and companies are complaining that they are expected to invest heavily in marketing. Several Sightholders are considering re-organization plans as a result.
Sightholders have just received their ITO's for the second half of the year. Usually they ask for some ex-plan goods and while some actually need the goods, others do so at least partially for political reasons. Penny’s decision to axe the ex-plan is not irreversible. The DTC is required by the EC to supply goods if they have them. However, he asked listeners not to apply for ex-plan unless they really want the goods.
The bottom line is that De Beers is actively trying to instill confidence among their clients, something Sightholders have been seeking for months.
Regarding the Sight itself: it is estimated at above $675 million, with assortments unchanged. As with the previous Sight, and following Penny’s call, several boxes, estimated at more than 5 percent of the total Sight by value, were left on the table.