Sarine Technologies realises revenues of US$15.6 million in the first quarter of 2022

Sarine Technologies earned US$15.6 million in the first quarter of 2022, only 9.9% less than its exceptionally strong first quarter of 2021, with a robust gross margin of 71.8%, the company said in its trading update for investors. 
Trade of rough and polished diamonds related revenues accounted for 11.6% of overall revenues. With all the company’s activities now nearly back to prepandemic levels, and its General and Administrative expenditures even above normal due to increased legal and other expenses related to its IP enforcement and litigation in India, its profit from operations was just under US$ 4.0 million, and, with ongoing beneficial tax rates, its net profit was just under US$ 3.4 million. Cash and short-term deposits surged to US$ 41.7 million at quarter's end, with zero borrowings. Receivables decreased modestly from 2021 year's end to US $22.7 million, with most due receivables having been collected.
Geopolitical uncertainties stemming from the hostilities in the Ukraine, which commenced in late February, and the renewed outbreak of Covid-19 in China with the resulting lockdowns ordered there, generated uncertainties that had minor negative impact on Sarine Technologies' business environment in the first quarter of 2022, the company’s statement said. Sanctions notwithstanding, the flow of rough diamonds into the value chain, including those of Russian origin, continued unabated in the first three months of 2022. Midstream polishing activities were commensurately robust, as evidenced by the utilisation of the company’s inclusion mapping systems, which continued throughout the first three months of 2022 on levels similar to those realised in late 2021, with averages exceeding 100,000 stones daily. 
“Subsequent to the first quarter's end, stricter sanctions on Russian rough diamonds in general, and Alrosa's production specifically, were enacted in April. These sanctions have reportedly had a more pronounced effect on the flow of Russian production, which accounts for some 35% of the total world output, into the midstream polishing segment, though it is not yet clear to what extent. We have so far not experienced any meaningful decrease in Galaxy®-family scanning activity in April, as compared to the scanning activity in the first quarter. In fact, scanning in April was higher than any of the preceding 12 months, except for March. Scanning data do indicate some reduction in polishing activity at some of our Indian customers since the beginning of May, however this may also stem from the onset of the summer vacation period in India, and has been manifested in reduced work shifts or days of operation (e.g., curtailed Sundays). As of this writing, we have not seen any material impact on our business from the ongoing geopolitical conditions. To a degree, the uncertainties affecting our Indian customers and their ramifications primarily on their demand for small stone Meteorite™ scanners, are being offset by renewed expansion of diamond polishing businesses in the southern African countries. We continue to closely monitor the ongoing situation arising from the conflict in the Ukraine,” Sarine Technologies said.