Sarine Technologies overcomes Covid blues, reports $2.4mn profit in ‘20.Singapore Exchange-listed Sarine Technologies Ltd, a global leader in manufacturing and marketing of precision technology products and services, has posted $2.4 million net profit for the financial year 2020 despite a sharp decline in its revenue following global lockdown to prevent the spread of Covid-19 pandemic.
The company had reported $1.4 million loss in the previous financial year. The company has attributed the turnaround to a massive cost reduction.
The Covid-19 virus severely affected the company’s operations for most of FY2020. Demand for polished diamond jewellery fell substantially for the first nine months of 2020, when retail activities in the Asia Pacific, Europe and the United States were restricted, on a rolling basis, for substantial periods, the company said in a statement.
On the production side, full and partial lockdowns in India for over four months from the end of March 2020 halted, or significantly reduced, all manufacturing and polishing activities in the world’s major diamond manufacturing centre.
As a result, the company recorded revenue of US$41 million in FY2020, a decline of 20 per cent from the US$51.3 million achieved in FY2019. The revenue of US$22.4 million in H1 2020 reflected a strong Q1 2020 with robust capital equipment sales and Galaxy scanning service income, followed by a sharp drop in revenue in Q2 2020 with the onset of the pandemic, the company statement said.
Revenue of US$18.6 million in H2 2020 comprised a weak Q3 2020 and a strong rebound in Galaxy scanning service income in Q4 2020.
Proactive steps were taken from late March 2020 to reduce the cost structure in light of the pandemic crisis by prudently cutting all non-essential activities. This reduced the company’s operating expenses by 22 per cent in FY2020 as compared to FY2019.
Meanwhile, the global diamond industry started on a path of recovery in H2 2020, aided by the reopening of jewellery retail activities, leading up to and including the end-of-year holiday season, and the consequent resumption of diamond manufacturing activities in India.
Initial data and reports indicate that China, the second-largest market for polished diamonds accounting for almost a fifth of global demand, experienced growth in luxury spending in 2020 as well as during the Chinese New Year season in 2021. The robust domestic consumer spending is probably the result of global travel restrictions severely curtailing Chinese tourism abroad.
In the United States, initial reports indicate that overall diamond jewellery spending during the critical year-end holiday season was stronger than expected, likely at the expense of travel and entertainment. The new administration’s proposed additional stimulus measures will help to buoy consumer sentiment.