In FY24, Noon Sugar Mills Limited (NONS) reported a net loss of PKR 619.45 million (LPS: PKR 37.50), a significant decline from the net profit of PKR 419.31 million (EPS: PKR 25.39) recorded in FY23. The loss was attributed to a higher sugarcane price of PKR 470 per maund and volatility in the USD-PKR exchange rate, as molasses was procured at elevated rates before the exchange rate reversed, compounding the losses. The company crushed 712,164 M.Tons of sugarcane in FY24, compared to 807,367 M.Tons in FY23.
Despite the reduction, NONS achieved its highest-ever average sucrose recovery of 10.30%, ranking second or third in Punjab for FY24. Sugar production stood at 73,597 M.Tons, slightly lower than the 75,717 M.Tons produced in FY23. Alcohol production also declined to 13,429 M.Tons in FY24 from 18,334 M.Tons in FY23.
Total assets increased significantly to PKR 9.08 billion in FY24, up from PKR 6.17 billion in FY23, primarily due to major capital expenditures, including the acquisition of a 100 M.Tons boiler from HMC and a 10MW turbine. The management anticipates improved fuel and cost efficiency regarding bagasse usage. The current sugarcane rate in Punjab varies between PKR 415-460 per maund, depending on the region and variety.
The industry plans to implement a pricing mechanism aligned with sucrose recovery, which management expects to materialize in the next 2-3 years. Molasses prices are currently PKR 26,000-29,000 per M.Ton, while ethanol prices range between PKR 710-740 per M.Ton, depending on shipment timing. However, international demand for ethanol remains subdued, exerting downward pressure on prices. Management highlighted that the ex-factory sugar price is approximately 20% less than the MRP, which is currently PKR 140 per kg. Holding costs are primarily impacted by financial costs, as maintenance and insurance costs per kg remain minimal.
Financial costs have already been reduced, with further reductions expected. Exports are contingent upon total sugar production, with the sugar advisory board allocating quotas based on surplus sugar production and approval from the ECC.
Management expects reported sugarcane area to increase by 8-10% compared to last year, though yields are estimated to be 15% lower. Initial estimates suggest sugar production may decline by 3-4% YoY, with a clearer picture to emerge by midFebruary 2025. The crushing season is expected to continue until March 10, 2025. Looking ahead, management anticipates recovering last year’s losses due to lower sugarcane procurement prices around PKR 425 per maund and improved sugar sale prices. The current crushing season is expected to be profitable, with the distillery segment also projected to perform well, supported by a stable exchange rate.
Important Disclosures
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