KARACHI, July 29: Sugar companies are generally coming up with sweet results this reporting season. Ten companies are expected to announce three-quarter (October-June 2005-06) numbers next week. They are: Crescent, United, JDW, Khairpur, Al-Abbas, Haseeb Waqas, Al-Asif, Dewan, Shakarganj and Bawany.

Among those that have already unveiled their nine months results, some companies have jumped out of the red, to display a healthy profit. Sanghar Sugar Mills posted a profit of Rs56 million for the nine months under review, compared with a loss of Rs8 million in the comparable period of the previous year. The company’s sales revenue at Rs796 million increased from Rs551 million. Cost of sales rose less fast to Rs656 million, from Rs502 million.

Shahmurad Sugar revealed an after-tax profit at Rs10 million, compared with a loss of Rs32 million in the similar term last year. After-tax earnings of Adam Sugar Mills doubled to Rs93 million, from Rs40 million in the similar period last year. This was in spite of the company having made a loss of Rs12 million in the April-June quarter, displacing the profit of Rs21 million in the same time last year.

Some of the companies that made an incredibly high profit included Mirpurkhas Sugar, which returned taxed profit at Rs183 million, almost three times the profit of Rs62 million made last year. Al-Noor Sugar also doubled its earnings after-tax to Rs170 million for the nine months period, from Rs84 million in the comparable period of 2005. Habib Sugar Mills at Nawabshah also displayed sizeable increase in its after-tax profit to Rs190 million as compared to Rs114 million in the same time last year.

Sindh Abadgar’s Sugar Mills managed to reduce losses to Rs71 million, from a nearly loss of Rs1 billion in the first nine months of the previous year. Losses of Baba Farid Sugar were held at about the same level of Rs90 million in both the years. The same went for another group company, Fecto Sugar Mills, which continued to be mired deep in deficit of Rs450 million in both the terms.

Among the occasional companies that did not fare as well as last year included Shahtaj Sugar Mills, which saw a drop in its after-tax profit to Rs107 million, from Rs188 million in the same period of 2005.

While most companies have pushed ahead with their earnings, a few are strangely laggards. Mehran Sugar went deeper into the red, amounting to Rs29 million for the three quarters under review, from Rs3 million in the same time last year.

But perhaps the mill that went totally the other way was Noon Sugar, which posted a profit at Rs7 million that happened to be only a fraction of its earnings recorded at Rs105 million in the same period of 2005. Apparently the profit and loss account contains no one-time ‘extraordinary item’, though the company seems to have suffered a staggering drop in sales to Rs614 million, from Rs938 million in the same time last year.One of the earliest directors’ reports available is that of Shahtaj, which explains the environment surrounding the sugar industry during the period. Winter months of December 2005 and January 2006 were colder than usual, resulting in severe frost, which affected the sugarcane crop causing a drastic drop in the sucrose recovery percentage. Most mills in Punjab had to face a low recovery problem due to frost.

The directors also contended that since there was a shortage of sugarcane all over Punjab, a price-war ensued. Sindh also reported somewhat less crop, all of which combined to show a drastic reduction in overall sugar production in the country. “To overcome this shortfall, the government allowed liberal import of sugar by all the parties,” the directors stated.

Making lemonade of a lemon, many sugar companies went into the import business and made money by selling at the ruling high prices. The government appears to be avoiding the contentious issue of announcing the support price of sugarcane for the next season. Companies recommend that the price be announced at the earliest in consultation with the growers and millers.