Sarine Technologies, a leading provider of technology for the diamond industry, has reported a 7% increase in profit for the first half of the year, driven by cost reductions and higher recurring revenues from new services targeting synthetic diamonds.
The Israel-based company announced that its profit rose to $1 million for the six months ending June 30, despite an 8% drop in overall sales, which totaled $21.9 million. The decline in sales was primarily attributed to a 37% decrease in the sale of traditional capital equipment, as conditions for natural-diamond manufacturing remained challenging.
However, the decrease in sales was partially offset by a rise in recurring revenues, which now make up more than 70% of Sarine’s total revenue. These recurring revenues, which come from fees paid by clients using Sarine’s systems like the Galaxy rough scanners, increased by 11%. This growth was supported by the company’s new initiatives, including the adaptation of its rough-planning technologies for synthetic diamonds and the opening of a new lab in India to service the country’s growing synthetic diamond industry.
Sarine emphasized that its revenue from lab-grown diamond services saw significant growth in the first half of the year. The company expects these services to contribute 15% to 20% of its annual revenue by the end of the year. Despite ongoing challenges in the rough-diamond market, Sarine remains confident that its strategic initiatives will lead to long-term growth and a stronger market position, with an expanded range of services for both natural and synthetic diamonds.
Looking ahead, Sarine predicts that revenue will recover in the long term as the oversupply in the diamond market diminishes and the demand for synthetic diamonds decreases due to falling prices. However, the company acknowledges that short-term prospects remain weak.
Sarine noted that the near-term demand for rough natural diamonds is expected to stay soft, with manufacturing activities subdued. However, as wholesale and retail prices for lab-grown diamonds continue to decline rapidly, there are signs of renewed interest in natural diamonds. The company anticipates that this shift could reignite demand for rough natural diamonds and help balance the market between natural and synthetic segments.
