Aber Diamond Corp. (TSX: ABZ) says its second-quarter profit fell to $20.1 million (U.S.) from a year-earlier $34.3 million as a tax liability charge offset a 24 per cent rise in sales revenue.

Earnings for the quarter ended July 31 dropped to 34 cents from 59 cents, the Toronto-based company reported today.

Sales rose to a record $173.3 million from $140 million. The firm reports in U.S. dollars.

Earnings from operations jumped 27 per cent to $56.2 million, but net earnings were reduced by a $9.6-million non-cash charge resulting from revaluation of Canadian-dollar denominated long-term future income tax liability.

"We are pleased with our strong results this quarter that have delivered a 24 per cent increase in sales and a 27 per cent increase in earnings from operations with both segments of our business, contributing to the record results," Robert Gannicott, chairman and CEO, said in a release.

"Rough diamond production increased 21 per cent in the quarter as a result of grade enhancements from improvements to the diamond recovery process. In our Harry Winston business, the demand for premier jewelry and watches continued to grow in our new and existing salons worldwide."

Thomas O'Neill, president of Aber and CEO of Harry Winston, said a 41 per cent increase in sales from the global firm's 15 salons and selective watch wholesale network "reinforces the strong global demand for the premier diamond jewellery and watches of Harry Winston.

"Our newest salon, in Beijing, opened during the quarter and our clients have responded well to our collections. We believe we are well positioned for the important upcoming holiday season."

He said the company is on schedule to open three more salons in the third quarter in key regions, including Hong Kong, Chicago and Nagoya, Japan.

Aber Diamond is focused on the mining and retail segments of the diamond industry. The company supplies rough diamonds to the global market through its 40 per cent ownership in Canada's Diavik mine and owns one of the world's top retailers of diamond jewellery, Harry Winston Inc.