Sarine declined by 34% YoY
Polished
diamond retail contributes
just
under 3% of overall revenue!
Books
net loss of
US$1.4
mn in Q1
Recently
Sarine Technologies Ltd announced its financial results for the first quarter
(Q1) ended 31 March 2019 that say, “a record deliveries of 33 Galaxy family
systems to customers in India increased total installed base to 443 as of 31
March 2019.”
In
Q1 2019, the working capital issues experienced by midstream diamond
manufacturers in India was exacerbated by the banks’ call for return of some of
the already extended credit. Combined with negative sentiments arising from
uncertainties surrounding lab-grown diamonds (LGD) and ongoing trade disputes
between the U.S. and China, the midstream diamond industry saw a reduction in
manufacturing activities and capital investment.
Consequently,
the Group recorded a 34% decline year over year (YoY) in Group revenue to
US$10.9 million due to lower capital equipment sales and reduced recurring
income from inclusion mapping services, though these dropped less than the
reduction in rough entering the pipeline, as evidenced by reduced DeBeers
sights in the first quarter. Over 55% of the quarterly Group revenues were
recurrent in nature and polished diamond retail-related business activities
accounted for just under 3%.
In
spite of the headwinds, the Group delivered 33 Galaxy family systems, including
29 Meteorite and 4 Meteor models, to customers in India in Q1 2019. With this
record number of quarterly deliveries, the total installed base of Galaxy family
systems increased to 443 as of 31 March 2019.
Due
to lower sales and the change in product mix, gross profit declined 6% to
US$6.1 million and gross profit margin fell to 56%. In order to preserve its
financial strength amidst uncertain business conditions, the Group has placed
added emphasis on prudent management of expenditures and this resulted in a
decrease in overall operating expenses. Given lower revenues and gross
profitability, the Group recorded a net loss of US$1.4 million in Q1 2019.
Prospects:
“Shortages
in certain categories of polished stones and the latest DeBeers sight in April
2019, provisionally at a more usual US$575 million, may be initial indications
of a return to more normal levels of polishing activities. At Sarine, we have
seen a distinct uptick in scanning activities by our inclusion mapping systems
to record levels, with the number of scans exceeding 50,000 on some days last
month,” commented Mr. David Block, CEO of the Group.
“As
for the possible advent of LGD into the market, we would like to emphasize that
our technologies are equally applicable to HPHT LGD. Even with CVD LGD, which
arguably require less automated inclusion scanning, our products may be
utilized during the planning process as well as laser cutting. More
importantly, the Group’s suite of solutions for the retail trade of polished
diamonds, such as Sarine Profile, AI-driven grading of the 4Cs and Sarine
Diamond Journey are equally applicable to the LGD consumer market since the
retail sale process will not differ materially from that for natural stones,”
Mr. Block added.
Sarine
Profile and Sarine Diamond Journey continue to generate keen interest and gain
traction in the APAC as well as other markets. Besides retailers, polished
diamond provenance and traceability have become key issues of concerns for
other stakeholders such as banks, insurance companies and governments. With its
market leadership position and comprehensive suite of solutions, the Group is
well-placed to work with the diamond industry to address these increasingly
important issues.
To
this end, the Group is promoting Sarine Diamond Journey as the most readily
available solution and actively enrolling key midstream polishers into the
ecosystem to make their stones, Journey-ready.
Comments
Post a Comment