According to Sarine Technologies Ltd, the industry conditions and global economic conditions have negatively affected the company in working results for the quarter and 9 months ended 30 September 2023.
The macro-economic uncertainties in the U.S. continue to affect consumer confidence and retail sales. Economic woes in China have prevented the expected retail recovery in the second most important market for polished diamonds. Indian manufacturers strove to reduce inventories as well as ahead of likely new G7 sanctions on Russian diamonds, anticipated for early 2024.
With the decline in the quantities of rough diamonds entering the pipeline, commensurately reduced manufacturing activities were evident. Appropriately, the company's traditional businesses of selling capital equipment and, to a lesser extent, its inclusion scanning services, were impaired.
Due to this, Sarine's Capital equipment sales in the third quarter dropped significantly, and, with no Galaxy-family inclusion mapping systems delivered in the quarter, the company's installed base remained at 823 systems. Overall recurring revenues for Q3 and 9M 2023 were 72% and 64% of the group's average overall revenue.
Trade-related revenues accounted for about 32% and 21% of Sarine's overall revenue in Q3 and 9M 2023. The loss in Q3 2023 and the decline in profitability in 9M 2023 were mainly due to lower revenue and a lower gross profit margin resulting from lower revenue and product mix. To compensate for reduced midstream polishing activity, the Sarine Group is taking steps to reduce operating expenses in Q4 2023.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished
