Israel-based Sarine Technologies’ revenues in H1 2022 fell 13% to $31.2 million as demand was affected by factors such as the war in Ukraine and an increasingly inflationary economic environment, along with ongoing outbreaks of Covid-19 in China and the corresponding lockdowns imposed on some major cities.
The comparable H1 2021 period was driven by a post-pandemic surge in diamond jewellery consumer demand and a commensurate surge in polishing activity in the midstream segment of the diamond value chain, the company explained.
Sarine said the -48% decline in profitability to $6.5 million in H1 2022 was mainly due to the lower sales and also the overall increase in operating expenses, as operations further returned to their pre-pandemic normal.
China’s “zero Covid-19” policy is having an impact Sarine’s supply chain as well as on retail, which is relevant, as China is the second most important market for polished diamonds, the company cautioned. In general, consumer demand in the US for diamond jewellery appears to remain strong, although inflationary conditions could have a dampening effect going forward. US retailers remain cautiously optimistic on prospects for the year-end holiday season, it noted.
Demand for our Galaxy® family scans, which remain at previously realised high levels, is expected to continue. This indicates the flow of rough diamonds into the midstream has not diminished significantly, reducing concerns regarding the impact of sanctions on the major Russian producer, Alrosa.