Sarine Tech H1 profit surges to US$12.6m on robust manufacturing and retail activity

Jeanette Tan

Published Thu, Aug 5, 2021 · 12:38 AM

DIAMOND systems manufacturer Sarine Technologies U77 posted a net profit of US$12.6 million for the fiscal first half, more than 10 times the US$1.2 million from a year ago thanks to a resurgence of manufacturing and retail activity, the company said on Thursday.

These, it said, were coupled with strong, sustained demand for diamond jewellery in key global markets in the absence of alternatives for luxury spending, such as travel. The company also said it saw stronger than expected end-of-year holiday season demand in the US, as well as a strong Chinese New Year season in the Asia-Pacific market. These, it noted, translated to "meaningfully higher sales".

This recovery, the company added, withstood the challenges and uncertainties stemming from the resurgence of the Covid-19 virus in India for much of April and May 2021.

"In fact, due to these uncertainties, the seasonal May summer vacation shutdown in India, which typically lasts two to three weeks, was cancelled by many of the midstream manufacturers fearing imminent lockdowns, thus actually allowing near continuous work throughout May and June 2021," the company said in its regulatory filing on Thursday.

Sarine also noted that increased midstream diamond polishing activity in H1 2021 resulted in an over 80 per cent increase in recurring revenues (mainly from its Galaxy inclusion scanning) as compared to H1 2020.

Another contributing factor was a one-time U$300,000 non-cash gain associated with the downsizing of leased office space at its headquarters in Israel in April 2021, it added.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Net profit for the six months ended June 30, 2021 translates to earnings per share of 3.6 US cents, against earnings per share of 0.33 cents a year ago.

Revenue was up 60.5 per cent to US$36.0 million, compared with US$22.4 million over the year-ago period.

Sarine's board said it has paid out a final dividend of 0.5 US cent per share.

Looking ahead, the company appears conservative in its projections regarding the impact of Covid-19 on the diamond value chain, even though it notes economies are opening up and adopting a "live with" rather than "lock down" stance.

In the diamond market, leading producers DeBeers and Alrosa reported strong demand and selling cycles, raising prices of rough diamonds over five consecutive months, with margins of 10 per cent and higher projected in the secondary market. This raises concerns, Sarine noted, of lower profitability in view of rough diamond prices outpacing the rise of polished diamonds.

Shares of Sarine Technologies were trading at 81.5 Singapore cents, up 6.5 cents or 8.7 per cent as at 10.43am.

READ MORE:

sarine tech Financial results luxury

Reuse this content Feedback