Sugar millers made a lot more money in the financial year 2022-23. They reported a huge 78% increase in profits. The sugar industry, which is on the stock exchange, did really well from October 2022 to September 2023. They made a record profit of Rs22 billion, mainly because sugar prices went up, giving them more profit.
The part of sugar that becomes ethanol also did better in the same year. This happened because ethanol prices in the world market were good, and the value of the local currency went down compared to the dollar. The total sales of the sugar industry also went up by 29%, reaching Rs304 billion in the same financial year. This growth was because they exported a lot of sugar and the prices within the country went up by 28%.
Something important that happened in the year was that the government allowed the export of 250,000 tonnes of sugar in January 2023. But the condition was that the money earned in dollars had to be brought back within 60 days. So, the sugar industry exported 249,000 tonnes. This export put pressure on the prices within the country, making them go up from Rs88/kg in October 2022 to Rs166/kg in September 2023. But now, these prices have come down a bit to Rs147/kg. International sugar prices also went up and then down in the same way. They increased by 45% from October 2022 to September 2023 and are now at $21.40 cents/lb. The sector's profit margin improved from 15% in FY22 to 18% in FY23 because they were able to keep more money from their sales.
The costs of selling and distributing also went up by 38% because they were selling more and because of inflation. But there's a problem. The finance cost, which is the money they pay for borrowing, went up by 60% in the same year. It went from Rs11 billion in FY22 to Rs18 billion in FY23. This happened 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.
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