Company and reporting identity
Company Name: Al-Noor Sugar Mills Ltd
Ticker: ALNRS
Reporting period: Nine months ended 30 June 2026; the latest quarter covers 1 April to 30 June 2026.
Reporting basis: Unaudited standalone interim financial statements prepared under Pakistan’s interim-reporting framework. The statement of financial position is compared with the audited 30 September 2025 year-end, while income and cash-flow comparisons use the nine months ended 30 June 2025. Official nine-month report
Verdict
Al-Noor Sugar Mills delivered a mixed nine-month result. Factory performance improved: more cane was crushed, sugar output rose 27%, recovery increased to 10.25%, MDF production grew and operating profit advanced 16%. Yet sales declined 9%, the April–June quarter moved into loss, other income fell sharply, and higher levies absorbed much of the operating improvement. The larger concern is cash conversion. Stock-in-trade increased by PKR 5.53 billion during the nine months, operating cash outflow widened to PKR 4.63 billion and short-term borrowing more than doubled from the September year-end. The company therefore ended June with better industrial output but much heavier working-capital financing.
This is not a simple deterioration story. Gross profit was broadly stable despite lower revenue, and the nine-month gross margin improved because cost of sales fell faster than sales. MDF profitability strengthened materially. However, the final quarter exposed weaker pricing and financing pressure: quarterly gross profit fell 27%, operating profit almost halved and finance cost increased. The quality of the next result will depend less on how much sugar was produced and more on whether that inventory is sold at acceptable prices and converted into cash.
AlphaGen model readings
- Alpha QoQ Score: 10.75
- TTM Performance Score: 41.92
- 3Y Business Perf Score: 38.19
- Sector Leadership Score: 24.8
These four readings are AlphaGen model outputs, not financial figures reported by Al-Noor Sugar Mills. They should be considered alongside the official accounts and operating disclosures, not as substitutes for them.
Nine-month comparison: current period versus prior period
- Sales: PKR 10.498 billion versus PKR 11.536 billion, down 9.0%. Higher production did not translate into higher reported revenue because sugar-segment external sales declined and exports nearly disappeared. Official income statement and segment note
- Gross profit: PKR 1.707 billion versus PKR 1.697 billion, up 0.6%. Gross margin improved to 16.26% from 14.71%, showing that the 10.7% reduction in cost of sales more than offset the sales decline. Official financial data
- Operating profit: PKR 826.7 million versus PKR 711.3 million, up 16.2%. Administrative and distribution expenses both declined, while MDF operating profit increased strongly. Official segment performance
- Finance cost: PKR 732.0 million versus PKR 777.9 million, down 5.9%. The reduction helped the nine-month comparison, although the April–June finance charge moved in the opposite direction. Official income statement
- Profit after tax: PKR 27.6 million versus PKR 40.0 million, down 31.1%. Earnings per share declined to PKR 1.35 from PKR 1.95. Official PSX financial result
Interpretation: the core operations improved, but lower other income, weaker associate contribution and a much larger levy charge prevented that improvement from reaching the bottom line.
The latest quarter was materially weaker
The quarter from April to June is important because it reveals the direction after the crushing season. Quarterly sales fell 3.8% to PKR 3.911 billion from PKR 4.066 billion. Cost of sales was almost flat, so gross profit dropped 27.0% to PKR 399.8 million and gross margin compressed to 10.22% from 13.47%. Operating profit fell 49.4% to PKR 132.7 million. Official quarterly comparison
Below operating profit, the pressure intensified. Quarterly finance cost rose 12.6% to PKR 346.7 million, exceeding operating profit by a wide margin. The share of profit from associates declined to PKR 30.3 million from PKR 45.9 million. Al-Noor therefore recorded a loss before levies and income tax of PKR 166.3 million, versus a profit of PKR 16.3 million in the comparable quarter. After levy and tax effects, the company reported a PKR 50.9 million quarterly loss versus PKR 65.7 million profit a year earlier; loss per share was PKR 2.49. Official result announcement
The economic message is that nine-month operating improvement was front-loaded. The later quarter faced a weaker spread between selling prices and production cost, while financing remained expensive. That does not erase the production gains, but it makes inventory realization and debt reduction the central tests for the final quarter of the September financial year.
Sugar operations: more cane and better recovery
Al-Noor crushed 886,406 tonnes of sugarcane, up 18.5% from 747,944 tonnes. Sugar production increased 27.0% to 90,853 tonnes from 71,515 tonnes, while recovery improved by 0.69 percentage point to 10.25%. Molasses output rose 16.7% to 45,580 tonnes. Management attributed the better crop to favourable weather and improved irrigation-water availability. The higher recovery rate matters economically because it yields more saleable sugar from every tonne of cane and spreads factory overhead over greater production. Directors’ production review
The improved factory result did not produce higher sugar revenue. Sugar-segment external sales declined 16.4% to PKR 5.515 billion from PKR 6.595 billion, while sugar operating profit was broadly flat at PKR 462.4 million. The company’s geographic note shows exports of only PKR 14.7 million, compared with PKR 816.8 million in the prior period. Management also warned that surplus domestic sugar was weighing on prices and said the industry association had sought permission to export surplus stock. This is a management statement about the operating environment; export approval and future prices remain outside the company’s control. Segment and outlook disclosures
MDF board was the stronger segment
MDF production increased 3.8% to 52,666 cubic metres from 50,733. External MDF sales were PKR 4.983 billion, slightly above PKR 4.941 billion, while MDF operating profit rose 48.0% to PKR 364.3 million from PKR 246.1 million. Management linked the production improvement to timely raw-material availability and steady demand, and described the product range as serving different thickness requirements. MDF segment review
MDF provided meaningful diversification: it generated about 47% of reported external revenue and approximately 44% of segment operating profit. Its stronger margin partly offset the weaker sugar sales environment. Readers should nevertheless avoid treating MDF as fully defensive. Construction, furniture and interior-demand cycles, wood-fibre availability, energy costs, imported equipment or chemicals and competition can all affect volume and margin. Those sensitivities are economic interpretation; the reported facts are the segment’s current revenue, production and operating profit.
Margins, other income, associates and taxation
The nine-month operating margin improved to 7.88% from 6.17%, reflecting cost control and the richer MDF profit contribution. Distribution cost declined to PKR 142.9 million from PKR 162.8 million, and administrative expense fell to PKR 727.0 million from PKR 808.9 million. These savings were real, but they were partly offset below operating profit.
Other income fell 72.3% to PKR 52.1 million from PKR 187.9 million. The prior comparative included a PKR 147.7 million reversal of a provision against export subsidy upon realization, so part of the year-on-year decline reflects the absence of that non-recurring benefit. Share of profit from associates declined 20.2% to PKR 81.4 million. The company held 15.625% of Shahmurad Sugar Mills and 14.285% of Al-Noor Modaraba Management at June 2026; the associate contribution recognized in the interim accounts came from Shahmurad. Cash-flow adjustments and investment note
Levies increased to PKR 152.9 million from PKR 47.9 million, a rise of more than three times, and were the largest reason the modest increase in profit before levies did not flow through to net profit. Current-period deferred tax expense was PKR 47.8 million. Because levy and tax calculations are provisional until the annual accounts, readers should compare the final September tax reconciliation with this interim treatment. Tax and levy disclosure
The inventory build dominates the balance sheet
Total assets increased to PKR 21.904 billion from PKR 16.305 billion at September 2025, but most of the expansion came from stock-in-trade. Inventory rose 174.8% to PKR 8.694 billion from PKR 3.164 billion. The notes show PKR 7.506 billion of closing finished goods and state that refined sugar inventory worth PKR 5.707 billion was pledged against cash-finance facilities and Murabaha or Istisna arrangements. Balance sheet and inventory note
This is the key balance-sheet relationship: production created stock faster than sales converted it into receivables and cash. Trade debts actually fell to PKR 55.1 million from PKR 201.7 million, while cash and bank balances increased to PKR 665.6 million. The liquidity problem is therefore not primarily customer receivables; it is capital tied up in finished stock. The ultimate outcome depends on selling volume and net realization. Inventory can support future revenue, but if domestic prices remain pressured, its carrying and financing cost can erode margin.
Cash flow and borrowing
Cash generated before working-capital changes was PKR 1.324 billion, slightly above PKR 1.204 billion. The PKR 5.530 billion increase in stock-in-trade, however, drove net cash used in operations to PKR 4.634 billion, compared with PKR 1.554 billion outflow a year earlier. The company also spent PKR 240.7 million on property, plant and equipment and paid approximately PKR 78.5 million in dividends. Official cash-flow statement
Financing filled the gap. Long-term financing increased 78.1% to PKR 3.198 billion, and short-term borrowings increased 140.7% to PKR 7.067 billion. During the period the company received PKR 1.850 billion of long-term financing and recorded a PKR 3.554 billion net increase in short-term borrowing. Net financing cash inflow was PKR 4.650 billion. This explains how Al-Noor funded the inventory accumulation, but it also raises exposure to financing rates and delays the benefit of the improved recovery rate until stock is monetized. Borrowing and financing cash flows
Dividend, corporate actions and reporting risks
The board declared no cash dividend, bonus issue, rights issue or other entitlement for the June 2026 period. The cash-flow and equity statements show that the company paid the previously approved final FY2025 dividend of PKR 4 per share, or about PKR 81.9 million in the equity movement. Official board result Equity statement
The report also says a PKR 575 million Competition Commission penalty from 2021 had become ineffective after the Supreme Court dismissed the regulator’s review petition on 24 February 2026. That is a disclosed legal development, not operating income. The main forward risks remain surplus-sugar pricing, export-policy timing, the ability to release pledged inventory, financing cost, cane procurement and recovery, MDF demand and input availability, and the seasonal concentration of sugar production. Contingency note
What to monitor next
- Sugar inventory quantity, selling price and the speed at which pledged stock converts into cash.
- Whether sugar exports are permitted and whether realized export economics justify freight and financing costs.
- Short-term borrowings, finance cost and operating cash flow after the crushing-season stock build.
- Sugar recovery, cane cost and sugar-segment operating margin—not production volume alone.
- MDF selling volume, operating profit and raw-material availability.
- The final September 2026 levy and income-tax reconciliation.
A healthier next result would combine inventory reduction, positive operating cash and lower borrowing without sacrificing the improved recovery rate or MDF profitability. If stock remains elevated while sugar prices stay under pressure, the operating gains reported for the nine months may continue to be absorbed by carrying cost and finance expense.
Sources
Al-Noor Sugar Mills Limited — Third Quarterly Report for the nine months ended 30 June 2026. Official PSX-filed report
Al-Noor Sugar Mills Limited — financial results approved on 28 July 2026. Official PSX result filing
Pakistan Stock Exchange — ALNRS company profile and announcement history. PSX company page
Al-Noor Sugar Mills Limited — official company and investor information. Company website