Karachi: On behalf of the Board, Mehran Sugar Mills Limited presented its financial and operational results for the period ended June 30, 2024. According to information available from the Pakistan Stock Exchange (PSX), the company navigated a challenging landscape marked by increased production costs and significant financial pressures.
In the financial year ending on June 30, 2024, Mehran Sugar Mills experienced a notable increase in sugar production, which rose by 13.5% to 97,384 metric tons, up from 85,796 metric tons in the previous year. The sucrose recovery rate also improved slightly from 10.66% to 10.79%. Despite adverse market conditions, the company managed to enhance its operational output, with molasses production reaching 40,255 metric tons, an increase from the previous year’s 37,867 metric tons.
Financially, the company faced a steep rise in expenses, primarily due to soaring sugarcane costs, which surged by over 40% from the last season, further exacerbated by market price increases of 15-20%. The increased cost of sugarcane, constituting 80%-85% of total production costs, significantly impacted the financial results. Turnover for the period stood at Rs. 8.96 billion, up from Rs. 7.41 billion in the previous year, but this was offset by heightened finance costs, which nearly doubled to Rs. 1.01 billion due to increased borrowing rates.
Profitability took a severe hit, with profit before tax plummeting by 80% to Rs. 305.65 million from Rs. 1.44 billion in the previous year. Net profit after tax also decreased, standing at Rs. 298.35 million compared to Rs. 1.05 billion in June 2023. Earnings per share fell to Rs. 3.98 from Rs. 13.96.
The sugar industry faced additional challenges from government policies and market dynamics. The Federal Government has permitted the export of 150,000 tons of sugar, with potential for further allocations, which could provide some relief to the industry by enabling participation in global markets. However, the timing of these exports and global market conditions will be critical in determining their impact on the company’s financial health.
Looking forward, Mehran Sugar Mills anticipates a bumper crop for the 2024-2025 season, which could improve operational efficiencies and financial outcomes. The company stresses the need for government support in facilitating sugar exports to ensure the timely payment of debts and bolster foreign exchange reserves.
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