Manufacturing Slowdown Is Likely, Sarine Says

RAPAPORT… The Russia crisis and India’s summer break have led to a moderate drop in manufacturing that is likely to intensify in the coming months, Sarine Technologies said after reporting a decline in first-quarter sales.

“I’m not sure [I] can say there is a significant slowdown, but there is a slowdown, part of it probably because of the vacation, part of it because of Russian goods,” Sarine CEO David Block told Rapaport News Monday, citing data from the company’s stone-scanning systems. “I would probably expect to see more of a slowdown going forward as inventories of rough that were in the safes and still in the pipeline start to peter out.”

Before the impact of the Western sanctions, revenue fell 10% year on year to $15.6 million in the first three months of 2022, reflecting an unfavorable comparison with a strong period of demand a year earlier, the Israel-based equipment provider said Tuesday in a trading update. Net profit came to just under $3.4 million, down from $6.7 million a year before.

While the market was normal in April, the geopolitical pressures started taking effect in May, particularly for customers that buy from Russian sources, Block pointed out. Purchasing from Alrosa became harder due to financial sanctions and logistical issues, while US demand for Russian merchandise waned.

“The Russian goods are [a larger] percentage of the smaller, cheaper goods than the bigger sizes,” the executive said. “We can see there is more of an impact [on] the players that do the smaller goods.”

India takes its summer break in May, with many diamond manufacturers working shorter hours and shutting for a few days. Most of them are expected to resume regular shifts by the end of the month.

Image: A Sarine scanning machine at the company’s laboratory in Israel. (Sarine Technologies)