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Daharki: JDW Sugar Mills Limited has released its condensed interim financial statements for the nine months ending on June 30, 2024, showcasing a significant increase in net profit and addressing several industry challenges.
The company reported a net profit after tax of Rs. 8,370 million, a substantial rise from Rs. 1,478 million in the same period last year. This growth reflects an earnings per share increase from Rs. 25.29 to Rs. 144.86. The gross profit ratio improved from 13% to 20%, with all segments, including sugar, sugarcane corporate farms, and co-generation power contributing positively to profitability.
According to information available from the Pakistan Stock Exchange (PSX), the primary factors behind this record profitability include a 62% increase in gross turnover, from Rs. 63 billion to Rs. 102 billion, driven by favorable sugar prices and the sale of carryover stocks. Other income rose significantly, mainly due to a net fair value gain of the sugarcane crop at harvest, reflecting higher yields and increased support prices.
However, financial charges also increased by Rs. 1,525 million due to higher markup rates and greater working capital loans, which were necessary to ensure timely payments to growers and meet other financial obligations. Notably, JDW Sugar Mills made an early repayment of all long-term loans outstanding as of September 30, 2023, a first since 1992-93.
The company also highlighted several challenges, including the gap between domestic and international sugar prices, which has led to selling sugar at below-cost prices, causing financial strain. The Federal Government’s restrictions on sugar exports and delayed decisions on managing surplus stock have exacerbated these challenges, leading to potential losses due to fluctuating international sugar prices.
Daharki Sugar Mills (Pvt.) Limited, a subsidiary of JDW, reported a profit after tax of Rs. 510 million, slightly down from Rs. 570 million last year, primarily due to increased finance costs.
Other salient features noted in the report include a balance sheet size increase to Rs. 80 billion from Rs. 52 billion and an upgraded credit rating by VIS Credit Rating Company Limited to ‘AA-/A-1′ in May 2024. Additionally, the company emphasized its commitment to timely growers’ payments and continued efforts to reduce financial costs through efficient management of working capital.
The report also mentioned ongoing legal efforts to recover subsidy amounts due from the Government of Sindh, highlighting the liquidity issues facing sugar mills in the region.
Overall, while JDW Sugar Mills has achieved significant financial success, it faces ongoing challenges within the broader sugar industry, necessitating careful management and strategic adjustments to maintain profitability and sustainability.