In FY24, SML reported a consolidated net loss of PKR 3.20 billion (LPS: PKR 24.59), compared to the previous year’s net loss of PKR 441.92 million (LPS: PKR 4.17). Segment-wise net profitability in SY24 was as follows: the sugar segment recorded a net loss of PKR 2.27 billion, the biofuel segment reported a net loss of PKR 700.71 million, the textile segment incurred a net loss of PKR 82.17 million, and the farms segment reported a net profit of PKR 658,000. The gross loss was attributed to higher production costs and lower sugar prices.
Milk demand also declined due to higher sales tax. In SY24, the company crushed 778,454 MT of sugarcane, compared to 1,019,181 MT in the corresponding period. Sugar recovery declined to 9.9% in SY24 from 10.26% in SY23. Sugar production stood at 72,213 MT, down from 104,540 MT in the previous year.
Molasses consumption dropped to 8,970 MT from 38,072 MT, while biofuel production fell to 1,781 MT from 7,947 MT. In SY24, the average sugarcane cost was reported at PKR 403.08 per 40 kg. The management stated that the average cost to produce one kg of sugar was PKR 108.47.
The management also noted that international ethanol prices fell significantly due to weakening demand. In Jhang, 296,641 MT of sugarcane was crushed, while Bhone crushed 201,303 MT. The average sugarcane price was PKR 398 per maund in Bhone and PKR 440 per maund in Jhang. Recovery rates were 8.36% in Jhang and 8.17% in Bhone.
Due to environmental impacts, sugarcane production per acre has declined, leading to a 20-25% reduction in overall production this year. Sugar recovery rates have fallen to 8.25%-8.50%, contributing to rising sugar prices. Sugarcane prices have exceeded PKR 500 per maund, as no support price has been set. The refined sugar selling rate is PKR 135-140 per kg, inclusive of 18% sales tax. Non-current assets held for sale include land intended for sugarcane payments; however, a stay order is in place. Accumulated losses were reported at PKR 5.30 billion.
Going forward, the management plans to sell assets to address the liquidity crunch, subject to regulatory approvals. Additionally, the company intends to shift towards solar energy to reduce costs. Furthermore, it plans to divest its textile assets due to high maintenance costs and unviable production conditions.
Important Disclosures
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