Sugar millers had a really good financial year from October 2022 to September 2023. They made 78% more profit compared to the previous year, reaching a record Rs22 billion. This success was mainly because the prices of sugar went up, allowing them to earn more money.
The part of sugar used to make ethanol also did well during the same year. This happened because ethanol prices in the world market were good, and the local currency’s value went down compared to the dollar. The total sales of the sugar industry went up by 29%, reaching Rs304 billion in the same financial year. This growth was due to increased sugar exports and a 28% rise in prices within the country.
An important event was the government allowing the export of 250,000 tonnes of sugar in January 2023. The condition was that the money earned in dollars had to be brought back within 60 days. The sugar industry exported 249,000 tonnes, which affected prices within the country, making them go up initially. However, they have come down a bit now.
The international sugar prices also went up by 45% from October 2022 to September 2023, and now they are at $21.40 cents/lb. The sector’s profit margin improved from 15% in FY22 to 18% in FY23, allowing them to keep more money from their sales.
However, there were increased costs in selling and distributing, going up by 38% due to selling more and inflation. A concerning aspect is the finance cost, the money paid for borrowing, which went up by 60% in the same year. It increased from Rs11 billion in FY22 to Rs18 billion in FY23, primarily because of higher interest rates and borrowing more money for daily operations.
The top-performing sugar mills in terms of profits were Shahmurad Sugar Mills, Al-Abbas Sugar Mills, and Habib Sugar Mills. Some companies did better than others because their ethanol business made more money, thanks to good prices in the world market and the local currency losing value against the dollar. The analysis looked at 20 sugar companies out of 23, as three companies hadn’t announced their results yet. It didn’t consider five companies that were classified as defaulters.
