Sarine Technologies Ltd announcing its financial results for the first quarter ended March 31, 2019 (Q1 2019) reported a revenue of US$ 10.9 million for the period. Compared to a revenue of US$ 16.6 million reported in Q1 2018, the revenue for the period under consideration was lower by a sizeable 34.4%.

“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,” Sarine said sketching in the details of the scenario it was working within during the period. “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.”

The Company said revenue had dipped as a result, with lower capital equipment sales and reduced recurring income from inclusion mapping services – though the latter dropped less in comparison to 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%, Sarine stated.

“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,” the Company reported.  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%,” Sarine said. “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.”

The Group was thus able to limit its loss to US$ 1.4 million for Q1 2019, the Company said. In the same period of 2018, the Goup had recorded a profit of US$ 3.1 million. Sarine reported a total comprehensive loss for the period of US$ 1.3 million, as against a total comprehensive profit amounting to US$ 2.9 million in Q1 2018.

“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,” said David Block, CEO of the Group. “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. As for the possible advent of LGD into the market, we would like to emphasise that our technologies are equally applicable to HPHT LGD. Even with CVD LGD, which arguably require less automated inclusion scanning, our products may be utilised 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.”

Sarine Profile™ and Sarine Diamond Journey™ continue to generate keen interest and gain traction in the APAC as well as other markets, the Company noted, adding that polished diamond provenance and traceability “have become key issues of concerns”, not only for retailers, but also 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,” the Company concluded. “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’.”