Sarine Technologies has reported net profit of US$12.6 million ($17.0 million) for the 1HFY2021 ended June, over 10 times higher than the net profit of US$1.2 million posted in the corresponding period the year before.
The higher profit was due to the higher revenue and gross profit margin (GPM) registered during the half-year period.
1HFY2021 revenue surged 60.5% y-o-y to US$36.0 million. This was due to the higher manufacturing activities in India, which began towards the end of the 3QFY2020 and continued towards 2021.
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The recovery in rough diamond manufacturing was due to the strong demand for diamond jewellery following the reopening of retail activities in the company’s key global markets, says the company in an Aug 4 statement.
The surge was also due to the lower base in the 1HFY2020, which was affected by the global lockdowns from Covid-19.
The resurgence in manufacturing activities in the half-year period meant higher capital equipment sales and higher recurring revenues from the company’s Galaxy inclusion scanning.
Total recurring revenues for the period represented some 40% of the group’s revenue in the 1HFY2021, compared to the 35% in the 1HFY2020.
Gross profit spiked 91.9% y-o-y to $26.8 million on the back of higher GPM due to sales volumes and product mix.
In USD terms, earnings per share (EPS) stood at 3.60 US cents on a fully diluted basis for the 1HFY2021 from 0.33 US cents a year ago.
In SGD terms, EPS stood at 4.84 cents on a fully diluted basis in the 1HFY2021, from 0.44 cents a year ago.
For the half-year period, Sarine has declared an interim dividend of 1.5 US cent per share, comprising 1.0 US cent according to its dividend policy and 0.5 US cent as an additional special interim due to the strong results.
Looking ahead, rough diamond price increases are outpacing the rise in polished diamond prices amid strong consumer demand for diamond jewellery. This, says Sarine, is putting pressure on the profitability of manufacturers, which is not sustainable.
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Going forward, the company also expects additional key producers to adopt its digital sales enabling technologies.
As of end-June, cash and cash equivalents stood at US$23.9 million.
Shares in Sarine closed 1 cent higher or 1.4% up at 75 cents on Aug 4.
Photo: Stock image
