Sarine Technologies warns of 'severely impaired' Q2 results as pandemic hits gem trade

MAINBOARD-LISTED Sarine Technologies, which makes systems and machines for the gem production industry, warned on Sunday of "ongoing impairment of our business until retail activity in key markets resumes", no thanks to the deadly coronavirus pandemic.

Israel-based Sarine expects its second-quarter results to be "severely impaired by the Covid-19 pandemic", with the malaise persisting into the third quarter, and has taken steps to reduce its cash burn rate by one-third against the budgeted operations that were initially planned for the year.

While business impact in the first three months was limited to a delay in the delivery of a key sub-system's parts from China, Sarine is now grappling with a lockdown in the rough diamond polishing hub of India, which contributes to three-quarters of group revenue.

With similar lockdowns in major southern African countries where stones are mined, "we are thus currently seeing only very limited revenues generated by our inclusion mapping service centres in Israel and in Moscow", Sarine said in a bourse announcement.

The retail slowdown in key markets, especially in the United States, is also expected to weigh on Sarine's business. On the other hand, an earlier recovery in China and other parts of the Asia-Pacific "may help jumpstart the industry pipeline" and support growth in these markets.

"Obviously, a lot hinges on the overall economic conditions that will prevail and on consumer sentiment," the group said.

The counter last closed lower by half a Singapore cent, or 2.44 per cent, to S$0.20 last Friday, while trading on a cum-dividend basis.