Sarine’s full year FY2022 revenues declined 5% to $58.8 million against FY2021 mainly due to weakened midstream polishing activities in H2 reflected by the year-over-year decrease in revenues from India, which accounted for more than half of the company’s sales. Sarine’s India revenues for the full year 2022 dropped 25% to $30.3 million compared with $40.5 million in 2021.
Full year FY2022 net profit declined 46% to $8.8 million against $16.5 million in FY2021, due to lower sales, product mix and operational expenditures returning to pre-Covid norms, the company noted.
Sarine said market conditions were challenging throughout most of FY2022. Negative geopolitical developments, commencing with the onset of the war in Ukraine, an inflationary economic environment with dramatically increasing interest rates and the zero-Covid policy related lockdowns in China resulted in equity market and housing value losses.
The company explained that price increases of rough diamonds throughout 2022 by a cumulative average of 35%, primarily due to the fear of disrupted supplies of rough diamonds from U.S. sanctioned Russian producer Alrosa, combined with the gradual decline in the prices of polished diamonds in 2022 as consumer sentiment worsened, resulted in impaired margins in the polishing segment and a higher inventory of polished diamonds. This reduced the level of diamond manufacturing in Q4 2022 in general, and especially so for the larger more expensive rough stones.
Geopolitical uncertainties are expected to continue into 2023. There is little end in sight for the conflict in Ukraine and with inflation lower, but still not tamed, global interest rates will stay elevated and could rise further in the months ahead. These uncertainties will continue to affect sentiments and demand for jewellery in the United States, Sarine cautioned.