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Manufacturing Slump Hits Sarine Earnings

Company expects net loss of $1 million to $1.5 million in first quarter.
Apr 23, 2019 7:22 AM   By Rapaport News
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Sarine Technologies expects a loss in the first quarter, amid market uncertainties that led to soft demand for equipment used in diamond manufacturing.

The net loss will be between $1 million and $1.5 million, the company cautioned last week, compared with a profit of $3.1 million reported for the same period last year. Sarine also predicts revenue of $11 million, which would be 34% below levels reported in the first three months of 2018.

The drop was influenced by tightening credit in the manufacturing sector, which has led to slower sales in India — Sarine’s largest market — as customers there face liquidity issues, the company said.

Uncertainties caused by the increase in popularity of lab-grown diamonds and the trade dispute between the US and China have also impacted the company’s sales, Sarine explained. 

“Together these factors have continued to result in a reduction in manufacturing activities, and consequently recurring revenues from inclusion-mapping services, as also evidenced by the ongoing reduction of miners’ rough output into the pipeline,” the company noted. “These negatives have also contributed to a tendency to postpone capital equipment expenditures.”

While Sarine sold a record 33 of its Galaxy diamond-inclusion-mapping systems during the period, those were for smaller stones, and have significantly lower gross margins than the models for larger stones, thereby faileing to generate as much revenue. 

Sarine will release its full financial report for the quarter in May.

Image: The Sarine lab. (Sarine Technologies)
Tags: Galaxy, Rapaport News, Sarine, Sarine Technologies
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