Gemfields set to swing to loss in 2023

(Sharecast News) - Coloured gemstone specialist Gemfields said in a trading update on Friday that its two primary operating assets, Kagem and MRM, contributed revenues of $89.9m and $151.4m respectively in 2023, a slight decrease from the prior year.

The AIM-traded firm said total auction revenue for the year marked the second-highest in its history, signalling sustained demand for coloured gemstones, albeit impacted by a reduced number of higher-quality emerald auctions.

Fabergé recorded revenue of $15.7m, a decline from the prior year, attributable to softer market conditions in the luxury segment.

A review of Gemfields' shareholding in Sedibelo Resources resulted in a fair value write-down of $28m to $4m.

The board said the adjustment reflected market valuation changes for comparable platinum group metals (PGM) companies and reduced financial performance of Sedibelo over the period.

Despite the non-cash write-down, Gemfields reiterated that Sedibelo remained non-core to its business operations.

As a result, Gemfields said it expected to report a net loss after tax of $2.8m for the year ended 31 December, compared to a net profit of $74.3m in 2022.

That loss primarily stemmed from the Sedibelo write-down and the withdrawal of a higher-quality emerald auction.

Losses per share were forecast to be 0.8 cents, while headline losses per share, including Sedibelo's fair value loss, was expected to be 0.9 cents.

Adjusted headline earnings per share, excluding Sedibelo's fair value loss, were projected at 1.5 cents.

"In what has been a year of both achievements and challenges, Gemfields recorded its second highest annual revenues alongside seeing record prices being paid for our rough coloured gemstones sold at auction," said chief executive officer Sean Gilbertson.

"Production of premium rough gemstones has been weaker at both Kagem and Montepuez Ruby Mining (MRM) compared to 2022, and resulted in November 2023's planned higher-quality emerald auction being withdrawn from our schedule."

Gilbertson said the company looked forward to completing its first auction of the year on Friday, with a commercial-quality emerald auction taking place in Jaipur, and its next higher-quality emerald and mixed-quality ruby auctions to take place in the second quarter.

"2023 also saw the start of a period of considerable investment across the group, from our position of financial strength at the end of 2022.

"We are confident that the short-term impact of this investment on our financial results and performance will lead to a stronger and genuinely transformed business, particularly at MRM, where construction is ongoing for a second processing plant."

At 1358 GMT, shares in Gemfields Group were down 2.08% at 12.98p.

Reporting by Josh White for Sharecast.com.