Shahmurad Sugar Mills Reports Mixed Financial Performance Amidst Rising Costs and Declining Ethanol Production

Karachi: With an increase in sugarcane production and subsequent rise in sugar output, Shahmurad Sugar Mills Limited presented its unaudited financial statements for the period ending June 30, 2024, reflecting a complex financial landscape shaped by rising raw material costs and fluctuating ethanol production. The report, released today, shows a notable decrease in profits despite higher sugar production, largely due to increased costs and reduced ethanol output.

The sugar division of Shahmurad Sugar Mills benefited from a better sugarcane crop compared to last year, with 654,604 metric tons of cane crushed during the period, up from 567,913 metric tons. This resulted in a sugar production of 71,905 metric tons, a 19.24% increase. The mill’s sugar recovery rate improved slightly from 10.60% to 10.98%. Despite this increase, the market for sugar remained pressured due to carryover stocks and limited government-approved sugar exports, which have not sufficed to stabilize sugar prices or support the sugarcane minimum support price paid to farmers.

In contrast, the Ethanol Division saw a decrease in production to 45,391 metric tons from last year’s 52,819 metric tons. This drop was attributed to heightened inventory levels in European markets, supply chain disruptions from ongoing Middle East conflicts, and increased sea freight costs. The financial toll was further exacerbated by a 17% increase in the cost of molasses and sharply higher interest rates impacting the company’s financial charges.

Financially, Shahmurad Sugar Mills reported a significant downturn in profit after taxation, which stood at 284,201 compared to 2,419,142 the previous year. Sales revenue was reported at 18.74 billion rupees, up from 14.47 billion rupees, while the gross profit saw a reduction from 3.53 billion rupees to 1.98 billion rupees.

According to information available from the Pakistan Stock Exchange (PSX), the future outlook for Shahmurad Sugar Mills remains cautious amid global economic uncertainties and local challenges. The management acknowledges these challenges, emphasizing the importance of government intervention to support the sugar industry through favorable export policies and pricing support to ensure its sustainability and the welfare of local farmers.

No changes were reported in the composition of the Board of Directors during the period under review, signaling stability in the company’s governance amidst operational and market volatility.