Sarine Tech Sees 85% Profit Plunge Amid Challenging Market

Technology
26/02/2019 12:35

Sarine Technologies recorded a fourth-quarter net profit of $93,000, down 85% from $613,000 the year before, citing challenging industry conditions, weak sentiment in the midstream and a downturn in consumer spending in China due to uncertainties stemming from the impact of trade tariffs. The company notes that credit for India’s manufacturing sector tightening, Indian Rupee exchange rate volatility and the 'legitimization' of laboratory-grown diamonds all conspired to generate weak results. 

In addition to weaker demand for capital equipment under challenging industry conditions, Sarine also registered lower recurring revenues due to reduced quantities of rough diamonds entering the pipeline and the seasonal slowdown in scanning activities during the Indian Diwali holiday period. Revenue during the period declined 6% to US$12.2 million in Q4 2018 from US$12.9 million in Q4 2017, causing gross profit to fall 11% to US$7.5 million. Sales in India, Sarine’s biggest market, fell 20% to $5.9 million for the three-month period. North American sales increased 10% to $222,000, while revenue in Israel tumbled by 33% to $786,000. For the full-year 2018, net profit rose 32% to $7.6 mn from $5.8 mn the year before. Revenue for the full year stood at $58.5 mn, compared with $58.6 mn the year before. 

Looking ahead, the company states, "In view of the prevailing negatives in the diamond industry midstream, particularly working capital impairment due to credit tightening by Indian banks, adverse sentiments are likely to persist into FY2019." Nonetheless, the group is "encouraged" by the record level of scanning activities due to additional sales of inclusion mapping systems to Indian manufacturers.