In SY24, MIRKS reported a net loss of PKR 2.22 million (LPS: PKR 39.17), a sharp decline from the previous year’s net profit of PKR 839.32 million (EPS: PKR 16.43).
The downturn in profitability was primarily driven by higher sugarcane prices, increased financial charges, and losses from associates. Sugarcane crushing increased by 9.5% YoY to 616,102 MT, while sugar production rose by 11.42% YoY to 66,101 MT in SY24. The company achieved a sucrose recovery rate of 10.73%, the highest in the industry.
The number of operational days also increased to 97, compared to 87 in the previous year. However, in 1QSY25, sugarcane crushing and production declined by 39% and 42% YoY, respectively, with a sucrose recovery rate of 9.92%. Management attributed the decline to lower sugarcane availability, reduced yield, and lower sucrose recovery, leading to lower production volumes. In the paper segment, MIRKS produced 68,750 MT in SY24 over 175 operational days. In 1QSY25, paper production and sales rose by 36% and 42% YoY to 11,565 MT and 11,670 MT, respectively.
The company is exporting paper to Middle Eastern markets, with management indicating that production is aligned with market demand. Waste paper prices were reported at PKR 60-66 per kg domestically, while imported paper prices ranged between PKR 60-90 per kg. Total revenue for SY24 increased by 54% YoY to PKR 11.97 billion, with sugar contributing 67% and paper accounting for the remaining 33%.
The company’s power mix consists of 15-20% solar energy, with the remainder sourced from bagasse. MIRKS is also developing a pulp project, expected to commence operations within a year at a capex of PKR 500 million. The project, utilizing wheat by-products, is expected to reduce costs by 60-70% by replacing imported pulp. Sugarcane procurement prices ranged from PKR 425 at the start of the season to PKR 600, with an average price of PKR 440-450.
Looking ahead, management anticipates higher bagasse prices, which could lead to increased operational costs. Sugar prices are expected to rise, despite government mandated discounts at specific locations during Ramadan. Sugar production is projected to decline by 15-20% YoY in SY25.
The company does not plan to raise capital through equity issuance but will continue to rely on bank financing. Management expects the paper division to reach breakeven and aims to enhance financial performance by optimizing financial charges and improving market dynamics. The crushing season is expected to conclude by late February or early March.
Important Disclosures
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