Karachi: Faran Sugar Mills Limited (FSML) announced a moderate financial turnaround for the half year ended March 31, 2026, as detailed in the company's Chief Executive Review dated May 29, 2026. The company reported a net profit after taxation of Rs. 17.4 million, a stark contrast to the net loss of Rs. 411.6 million recorded in the corresponding period of the previous year.
The company's gross sales remained largely consistent with the previous year at Rs. 6.23 billion, despite a decline in volumetric sales. Improved selling prices resulted in a significant increase in gross profitability, primarily driven by healthier margins. Operating profit before financial charges improved to Rs. 443.1 million from a loss of Rs. 107.6 million in the previous year. The finance cost reduced to Rs. 243.0 million from Rs. 431.1 million, contributing to the improved bottom line.
According to information available from the Pakistan Stock Exchange (PSX), FSML's financial performance was further bolstered by its share of profit from Unicol Limited, an associated joint venture company. The distillery reported a net profit of Rs. 600.7 million, with FSML's share amounting to Rs. 200.2 million. This was a significant increase from the Rs. 15.3 million share in the previous year, contributing to the company's profit before taxation of Rs. 400.2 million.
Operationally, FSML commenced its crushing season on December 5, 2025, achieving a satisfactory cane crushing and sugar production with an average recovery rate of 11.19%, up from 9.82% in the previous year. This increase in recovery rate occurred despite the absence of a support price for sugarcane, in line with the conditions agreed under the International Monetary Fund (IMF) program.
The company navigated a volatile sugar market, where prices showed an upward trend from late 2024 to late 2025, followed by a sharp correction and continued volatility throughout the crushing season. FSML capitalized on this by selling approximately 37% of the current season's production during the season, benefiting from improved domestic sugar prices and reducing finance costs.
Despite the positive financial and operational performance, FSML faces challenges due to an oversupply in the domestic market, resulting from a bumper sugar production of approximately 7.6 million tons during the 2025-26 season. The industry has advocated for the timely approval of surplus sugar exports to alleviate pressure on domestic prices and support liquidity. The estimated surplus of over 1.5 million tons presents ongoing challenges, including elevated borrowing costs and high inventory levels.
FSML's management credited the team's hard work and strategic sales planning for the company's improved performance amidst these challenges, expressing gratitude for the continued support of its bankers in managing financial resources efficiently.