Sakrand Sugar Mills Reports Mixed Financial Results Amid Rising Cane Costs and Lengthy Crushing Season

Karachi: On behalf of the board, Sakrand Sugar Mills Limited has released its unaudited financial statements for the nine-month period ending June 30, 2024. The company disclosed both operational and financial details, showing a blend of productivity gains in sugar and molasses production and significant financial challenges due to increased cane costs and stagnant sugar prices.

During the nine months reviewed, Sakrand Sugar Mills crushed 257,489 metric tons of sugarcane, slightly more than the previous year’s 252,153 metric tons, with the crushing season extending from November 6, 2023, to February 6, 2024—a total of 98 operational days compared to 74 in the previous year. Sugar production reached 26,269 metric tons, and molasses production was recorded at 13,590 metric tons. According to information available from the Pakistan Stock Exchange (PSX), the recovery rate for sugar slightly decreased to 10.202% from 10.217%, while molasses recovery improved from 4.895% to 5.278%.

The financial performance reflects the broader economic pressures on the sugar industry. For the period October 2023 to June 2024, Sakrand Sugar Mills reported net sales of PKR 2,985.49 million, up from PKR 2,343.81 million in the previous period. Despite increased sales, the financial results were adversely affected by rising costs. The gross profit dramatically fell to PKR 3.25 million from PKR 61.56 million. The company faced a net loss after taxation of PKR 101.61 million, compared to a loss of PKR 123.90 million in the previous year. The loss per share also improved slightly to PKR 2.28 from PKR 2.78.

The cost of cane per kilogram of sugar produced escalated significantly from PKR 76 to PKR 113, a result of the Sindh Government increasing the minimum support price for sugarcane by 41% from PKR 302 per maund to PKR 425 per maund. While the selling price of sugar increased to PKR 106 per kilogram from PKR 74, it was insufficient to offset the rising costs.

On a national level, sugar production in the 2023-2024 season totaled 6.8 million metric tons, with an additional carryover stock from the previous year bringing the total available quantity to 7.5 million metric tons—1.5 million metric tons above the annual consumption requirement of 6.0 million metric tons, valued at approximately 1.0 billion US dollars. Despite the surplus, the federal government’s controlled economic policies towards sugar mills have impeded the potential for free trade, as reflected in the delayed authorization for sugar export, which remains pending from the Commissioner’s Office.

The directors extended their gratitude towards government officials, financial institutions, suppliers, and shareholders for their ongoing support, crucial for the company’s endeavors in these challenging economic times.