Karachi: Sindh Abadgars Sugar Mills Limited has released its unaudited Condensed Interim Financial Statements for the six months ending on March 31, 2025. The company reported a decline in both profit and production, attributing the downturn to unfavorable weather conditions and reduced sugarcane yield.
The operational period for the fiscal year 2024-25 commenced on November 21, 2024, and concluded on February 23, 2025, totaling 95 operational days. This was an increase from the 87 days worked in the previous year. Despite the longer operational period, the sugarcane crushed amounted to 405,205 metric tons, a 22% decrease from the 521,657 metric tons processed in the preceding season. The company attributed this decline to abnormally high temperatures and below-normal rainfall, which adversely affected sugarcane output across the country.
Sugar production also saw a significant reduction, with only 40,445 metric tons produced compared to 56,855 metric tons in the previous season. The sugar recovery rate dropped to 9.98% from 10.9%, potentially impacting the company's profitability.
In terms of financial performance, Sindh Abadgars Sugar Mills reported a profit before tax of 102.07 million Rupees, down from 125.81 million Rupees in the previous fiscal year. After accounting for a taxation net of 24.72 million Rupees, the profit after taxation stood at 77.35 million Rupees, a decrease from the 92.49 million Rupees reported for the same period last year.
The net sales for the period declined to 1.80 billion Rupees from 2.25 billion Rupees in the corresponding period last year, primarily due to a 29% decrease in sales volume. Despite stable local sugar prices, the company highlighted that its profit during this period was significantly driven by export sales. The financial cost incurred during the review period was 121 million Rupees, a 51% reduction from the 246 million Rupees in the previous year, attributed to a frequent decline in the mark-up rate. Earnings per share were reported at 7.42 Rupees, down from 8.87 Rupees in the previous year.
According to information available from the Pakistan Stock Exchange (PSX), the overall sugar production in the country has decreased by approximately 15% due to the below-average sugarcane yield. This has led to an increase in local sugar prices, further exacerbated by the government's allowance of surplus sugar exports. The company anticipates this upward trend in prices will continue, with the possibility of requiring sugar imports if domestic consumption surpasses government estimates.
Looking ahead, the company expressed optimism about achieving reasonable profits in the current financial year. The State Bank of Pakistan has reduced the discount rate to 11%, down from a peak of 22%, in response to historically low inflation. This reduction aims to stimulate economic growth and reduce borrowing costs, potentially enhancing the profitability of the sugar industry, which was previously constrained by high financial costs.
Sindh Abadgars Sugar Mills is also addressing the rising production costs by implementing productivity and austerity measures. The company acknowledged the dedication of its employees and expressed gratitude to its bankers, growers, and shareholders for their unwavering support. The board remains hopeful for the company's success and improvement in the coming years.