Sarine Returns to Profit as Market Improves

Sarine Technologies’ profit was back in the black in the first quarter as lower polished inventory and a drop in rough prices contributed to a recovery in the flow of diamonds through the manufacturing sector.

“Capital-equipment sales recovered…while recurring revenue grew…as the quantities of rough diamonds entering the pipeline rebounded,” the diamond technology service provider reported Monday. “Lower inventory of natural polished diamonds at fiscal 2023 year’s end and significant reductions in natural rough prices in the first quarter of 2024 contributed to a recovery in their flow, benefiting Sarine’s core business.”

Group net profit came to $600,000 for the three months that ended March 31, the company noted. That compared with a loss of $2.8 million in the previous quarter. Reductions in the company’s operating expenses also contributed to the improvement, it added.

Meanwhile, revenue rose 27% compared to the preceding fourth quarter to $11.2 million during the first three months of the year. Sarine reported revenue of $11.5 million in the comparable first quarter of 2023, 2.6% higher than for the current period.

Capital-equipment sales increased 19% year on year, while recurring revenues rose 31%. The rise was the result of renewed restocking in the midstream and a higher level of diamond scanning, Sarine noted. The company expects business to pick up in 2024 as the market continues to recover.

“Within the natural-diamond industry, conditions have improved from the challenges of late 2023,” it said. “Considerably lower inflow of rough diamonds during the fourth quarter of 2023 reduced the inventory of polished natural diamonds in the pipeline. Substantial ongoing reductions in the prices of rough diamonds in 2024 have improved the profit margins of manufacturers. The market disruption caused by lab-grown diamonds most likely peaked in 2023. The recovery of the natural-diamond industry in 2024, if sustained, though at new levels lower than historic ones, has and should continue to benefit our traditional businesses of capital-equipment sales and Galaxy scanning. The group’s newly introduced services have started gaining traction, and we expect recurring revenue to increase from their broadening adoption throughout 2024.”

Image: A graphic displaying diamond mapping. (Sarine Technologies)