Gemfields warns recessionary pressures may dampen sales after record 2022

Fabergé's $2.2m 'Game of Thrones' egg, with a Gemfields Ruby in the middle. Source: Gemfields

GEMFIELDS was unlikely to scale the heights in free cash flow generation it achieved in 2022 for its current financial year, but it hoped to provide a regular stream of returns, said CEO, Sean Gilbertson.

Commenting in notes to the firm’s 2022 financial results ended December, published on March 24, Gilbertson said: “With recessionary fears now felt in some corners of the global economy, and against the backdrop of an inflationary environment, delivering the same financial performance in 2023 would be difficult to achieve”.

Gemfields announced it would pay on May 12 a record final dividend of $35m, the equivalent of 2.886 US cents per share. This was on the back of net cash as of end-December of $104.5m compared to $63m in 2021.

The financial performance was a result of “strong demand” for coloured gemstones following the Covid-19 pandemic. Prices paid for uncut emeralds and rubies reached “remarkable levels” during the first half of the period under review, said Gilbertson.

The company registered record revenue at its Kagem in Zambia and Montepuez in Mozambique as well as at Fabergé, the firm’s brand outlet. Following from its third ever dividend announcement last week, Gilbertson declared an ambition to “provide regular returns of capital when the business’ performance and market conditions allow”.

Gemfields is battling with the effects of insurgency in Mozambique which results in migrations of communities to the vicinity of its Montepuez mine as well as security risks. In February, the company announced the temporary evacuation of the mine.