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Revenue of JDW Sugar Mills Limited grew by 19.74%, but net profit fell by 60.64% during the nine-month period ending on June 30, 2023, compared to the corresponding months of the previous year. The decline in profitability was because of an increase in factory overheads, high markup rate and increased capital loans. Another major factor was a reduction in sugarcane yield per acre and the rise in input costs.

The company saw a surge of 24.95% in its cost of revenue, resulting in a 6.48% decrease in its gross profit. During this period, the company’s administrative expenses grew by 17.79% to Rs1.86 billion from Rs1.58 billion previously. Profit from operations plunged to Rs5.8 billion from Rs7.08 billion during the two comparable periods under review, resulting in a decline of 17.52%.

The company’s finance cost saw a notable surge of 73.63%, because additional capital loans were taken to cover the hike in financial charges and to meet timely payments to growers and other financial obligations during the period under consideration. As a result of this significant rise in costs, the company’s profit-before-tax and after-tax observed a significant dip of 64.06% and 60.64%, respectively.

The company’s earnings per share also reduced to Rs25.29 from Rs62.81, posting a decline of 59.74%. This shows that although the company managed to increase revenue, it failed to attain profitability as it faced challenges in managing costs and financial obligations.

Asset analysis

From September 2022 to June 2023, the company’s non-current assets rose by 7.35% to Rs24.5 billion from Rs22.9 billion. This indicates the company invested in long-term assets such as property, plant, equipment and intangibles. Another major shift is observed in current assets as they showed a significant rise of 66.56% during the period.

This hike indicates a rise in short-term assets such as investments and trade receivables. As a result, the total assets increased to Rs63.87 billion in June 2023 from Rs46.49 billion in September 2022.

Equity and liabilities analysis

Between September 2022 and June 2023, the share capital and reserves of the company fell marginally by 4.23% to Rs16.19 billion from Rs16.9 billion, reflecting a decline in share capital and accumulated profit. Similarly, non-current liabilities also decreased by 23.38% to Rs6.4 billion in June 2023 from Rs8.35 billion in September 2022. On the other hand, current liabilities grew significantly by 94.42% to Rs41.28 billion in June 2023 from Rs21.23 billion in September 2022 as the company observed an increase in financial obligations to finance working capital.

Cash flow analysis

The company successfully generated Rs1.55 billion net cash from operating activities in June 2023 compared to negative net cash of Rs6.5 billion in June 2022. Whereas, the net cash of Rs2.2 billion was used for investing activities compared to Rs1.18 billion in June 2022, indicating that the company continued to invest in business.

Financing activities generated a net cash of Rs1.53 billion in June 2023 compared to Rs7.77 billion in June 2022. At the end of the period, the company posted a cash and cash equivalent of Rs1.4 billion in June 2023.

Company’s profile

JDW Sugar Mills was incorporated in 1990 as a private limited company, and in 1991 it was converted into a public limited company. The core activities include production and sale of sugar, power generation and operation of corporate farms. The company works to enhance the social and economic development of rural areas by social mobilisation, women’s business development, support for technical and primary education, microcredit for the underprivileged, infrastructure development, livestock development, etc.

Credit: INP-WealthPk