Karachi: Faran Sugar Mills Limited (FSML) has reported a significant increase in losses for the half-year period ending March 31, 2025, amid challenging market conditions in the sugar sector. The company's financial performance has been adversely affected by low recovery rates from disease-affected sugarcane and a constrained supply of cane during the 2024-25 season. The domestic selling prices of refined sugar remained low, adding pressure on profit margins.
According to the financial results, FSML's gross sales for the period were reported at Rs. 6.280 billion, compared to Rs. 5.791 billion in the previous period, marking an 8.5% growth. Despite this increase, the company faced a loss after taxation amounting to Rs. 454.25 million, compared to a loss of Rs. 411.67 million in the previous year. The loss per share stood at Rs. 16.68, up from Rs. 12.34 in 2024.
The sugar sector faced a reduction in production, with the country producing 5.796 million tons of sugar during the 2024-25 season, a 15.3% decrease from the previous season's 6.762 million tons. No support price was set by any province for the season, in compliance with conditions set by the International Monetary Fund (IMF).
Faran Sugar Mills experienced similar challenges, with sugar production down to 60,052 metric tons from 90,727 metric tons in the previous season, affected by a constrained supply of cane and lower recovery rates. The operational period for the 2024-25 season lasted 104 days, during which 611,266 metric tons of sugarcane were crushed, compared to 867,332 metric tons in the prior season.
The financial cost for FSML during the half-year period was Rs. 584.78 million, significantly impacting the company's performance. The company's share in profit from equity accounted investments was Rs. 1.038 million. According to information available from the Pakistan Stock Exchange (PSX), the company's operating profit before financial charges was Rs. 202.17 million, compared to an operating loss of Rs. 107.58 million in the previous year.
The sugar selling price during the 2024-25 season ranged between Rs. 120-125 per kg, which led to sluggish sales volumes. However, following the season, the selling price of refined sugar has increased sharply, contributing to improved margins. FSML anticipates a stronger financial performance in the remainder of the fiscal year, supported by a favorable upward trend in domestic sugar prices and a decline in the discount rate.
Unicol Limited, a subsidiary, reported a gross profit of Rs. 1.461 billion for the period, with a profit after taxation of Rs. 46.38 million. Their sugar production volume was noted at 54,374 tons, slightly down from the previous year's 60,415 tons.
FSML remains optimistic about achieving a profit by the end of the fiscal year 2024-25, driven by strategic decisions and positive market developments.