Verdict: Mirpurkhas Sugar Mills’ June quarter reversed into loss. Record sugar recovery and higher production could not offset weaker selling prices, unsold stock and financing pressure. Paper and Board improved its segment result, and associate income increased over nine months, but overall economics were still strained: operating profit fell, finance cost exceeded operating profit, inventory more than doubled and operating cash flow turned negative.
Company Name: Mirpurkhas Sugar Mills Ltd
Ticker: MIRKS
Reporting period: nine months and third quarter ended June 30, 2026.
Reporting basis: unaudited condensed interim financial statements of Mirpurkhas Sugar Mills Limited, prepared under IAS 34 and compared with the corresponding periods ended June 30, 2025. The company has associates but no consolidated group column in this filing; share of associate profit is equity-accounted in the company statements. Amounts are Pakistani rupees in thousands unless stated otherwise. PSX records the exact-period results and report transmission on July 30, 2026.
AlphaGen readings
The following four readings are AlphaGen model outputs and are not company-reported financial figures. They are analytical signals to be considered alongside the official accounts.
- Alpha QoQ Score: 25.59
- TTM Performance Score: 62.27
- 3Y Business Perf Score: 47.1
- Sector Leadership Score: 25.8903
Nine-month comparison: weaker margins overwhelmed the sales base
The official nine-month comparison shows deterioration before tax despite lower finance cost and a larger associate contribution.
- Net turnover: PKR 8.78 billion versus PKR 9.58 billion, down 8.4%. Lower sugar and paper sales both contributed.
- Gross profit: PKR 1.09 billion versus PKR 1.37 billion, down 21.0%. Gross margin fell to 12.37% from 14.35%, a 1.98 percentage-point contraction.
- Operating profit: PKR 579.3 million versus PKR 901.7 million, down 35.8%. Administrative expense rose while other income declined.
- Finance cost: PKR 851.9 million versus PKR 918.9 million, down 7.3%. The reduction was insufficient because finance cost still equaled 147% of operating profit.
- Share of associate profit: PKR 223.6 million versus PKR 119.6 million, up 87.0%. This kept the pre-levy loss much smaller than the gap between operating profit and finance cost.
- Loss after tax: PKR 188.4 million versus PKR 28.6 million; loss per share widened to PKR 2.83 from PKR 0.43. Levies of PKR 122.6 million were payable despite the operating loss.
The June quarter: a sharp reversal from profit to loss
Quarterly sales fell 11.7% to PKR 3.49 billion and gross profit almost halved to PKR 303.0 million. Gross margin compressed to 8.68% from 15.23%. Operating profit fell 67.7% to PKR 155.3 million, while finance cost rose 3.8% to PKR 321.3 million. The quarter therefore generated a financing gap before associate income, levies and tax.
Associate profit declined to PKR 23.3 million from PKR 104.0 million in the quarter. Profit before levies and tax swung from PKR 274.9 million to a PKR 142.7 million loss. After PKR 46.2 million of levies and a small tax credit, the company reported a PKR 186.8 million loss, versus PKR 225.8 million profit a year earlier. Quarterly EPS moved from positive PKR 3.39 to negative PKR 2.81.
The result is not simply a lower-volume story. Cost of sales declined only 4.8% in the quarter while revenue fell 11.7%, which explains the much steeper decline in gross profit. Selling-price pressure, higher cane cost embedded in inventory and storage and financing expenses all reduced the benefit from improved factory recovery.
Sugar: record recovery met a surplus market
Management reported that 2025/26 sugar production rose 20.31% and that sucrose recovery reached the highest level in the company’s history. The detailed March 2026 half-year report quantified 63,739.9 metric tons of sugar from 556,065 tons of cane, with recovery improving to 11.46% from 10.42%. These are management disclosures, not independent industry measurements.
Nine-month sugar sales volume nevertheless fell 3.08% to 43,715 metric tons. Management said domestic selling prices declined about 15% while sugarcane prices increased more than 6%. It attributed the imbalance to nationwide surplus stocks and delayed export permission. Production efficiency improved, but realised economics weakened because more output could not be sold at a price that preserved the cane-to-sugar spread.
Sugar division turnover fell 6.3% to PKR 5.60 billion and segment profit before unallocated expenses fell 32.8% to PKR 706.2 million. Management’s gross-profit bridge shows sugar gross profit declining to PKR 793.8 million from PKR 1.18 billion. AlphaGen’s interpretation is that recovery gains protected the result from a still worse outcome, but could not offset price and inventory pressure.
Paper and Board: lower volume, better segment contribution
Paper production declined 9.7% to 29,409 metric tons and sales volume fell 13.6% to 28,253 metric tons, while average selling price rose 2.1%. Segment turnover fell 11.8% to PKR 3.17 billion, but management reported gross profit rising to PKR 291.8 million from PKR 190.2 million.
Paper segment profit before unallocated expenses increased to PKR 108.8 million from PKR 33.7 million. The improvement is meaningful, but the division still faces imported and local old-corrugated-container costs, freight and fuel volatility, intense competition and receivables extending up to 90 days. Management says the division’s debt burden continues to create significant financial losses after central financing costs.
The agro-pulping plant was fully commissioned by June 2026. Management expects it to strengthen raw-material sourcing. That is an operational milestone, not yet proof of lower unit cost: future reports need to show utilization, local fibre substitution, product quality and savings after depreciation and financing.
Operating expenses, associates, levies and non-recurring effects
Distribution cost declined 6.0% to PKR 257.7 million, but administrative expense rose 11.1% to PKR 275.8 million and other income fell 36.4% to PKR 32.7 million. These lines added to the gross-margin decline. Finance cost eased with lower average rates during much of the period, yet rising borrowing and the April policy-rate increase limited the benefit.
The PKR 223.6 million share of associate profit was mainly attributed by management to Unicol Limited, where improved sugar operations were partly offset by weak international ethanol prices. This contribution is economically important but does not provide cash automatically; dividends and the associate’s funding needs determine cash conversion. Mirpurkhas holds 33.33% of Unicol and 7.69% of UniEnergy.
Management also recorded PKR 21.09 million for prior-year super-tax obligations. The statement shows a net tax expense of PKR 16.7 million after other tax effects. Levies of PKR 122.6 million are presented separately and resemble a revenue-linked minimum tax burden: they remain payable even when pre-levy earnings are negative.
Balance sheet: inventory growth was funded by borrowing
Stock-in-trade increased 127.5% from September to PKR 3.67 billion, while stores and spares rose 45.9% to PKR 1.05 billion. Trade receivables declined 10.9% to PKR 1.42 billion, but that release was far smaller than the inventory build. Current assets rose to PKR 7.36 billion while current liabilities increased to PKR 8.85 billion, leaving a current ratio of about 0.83 times.
Short-term borrowing rose 40.3% to PKR 6.58 billion. Long-term financing including current maturities was PKR 4.49 billion. Combined short- and long-term bank financing was therefore about PKR 11.07 billion, up roughly 21% from September. Total assets increased 14.6% to PKR 16.05 billion, while equity fell 11.1% to PKR 2.49 billion.
The company recorded a PKR 124.1 million other-comprehensive loss, including fair-value and disposal effects on equity investments. Together with the PKR 188.4 million income-statement loss, this produced a PKR 312.4 million total comprehensive loss. Investment movements should be separated from operating sugar and paper performance, but they still reduce reported equity.
Cash flow and capital spending
Operating activities used PKR 1.15 billion, versus PKR 159.0 million generated a year earlier. The PKR 2.06 billion inventory increase was the main working-capital outflow. Higher payables and lower receivables provided partial offsets, but not enough to restore positive operating cash.
The company spent PKR 493.9 million on property, plant and equipment and received PKR 493.1 million from disposing of a related-party investment. Investing cash was therefore slightly positive at PKR 74.2 million. That disposal is not a recurring operating source of cash and should not obscure the capital programme.
Financing activities supplied PKR 1.12 billion, mainly through PKR 1.89 billion of additional short-term borrowing, after PKR 774.9 million of finance cost was paid. Cash ended at only PKR 76.1 million. The cash-flow statement confirms the central issue: unsold stock and investment spending were funded primarily with debt rather than internally generated cash.
Dividend and corporate actions
The July 30 result letter declared no cash dividend, bonus shares, rights issue or other entitlement for the period. The absence of a payout is consistent with the loss, negative operating cash flow, enlarged inventory and higher borrowing. It should be read as a capital-preservation outcome, not as a separate operating driver.
Risks and what to monitor next
- Sugar price and exports: track whether domestic surplus clears, export permission emerges and realised prices return above cane and conversion cost.
- Inventory: watch stock-in-trade, storage losses, quality risk and the speed at which the PKR 3.67 billion balance converts to cash.
- Borrowing and finance cost: compare short-term debt with operating cash flow; lower rates alone did not solve the financing burden.
- Recovery versus margin: record sucrose recovery is operationally positive, but the result depends on cane price, sugar price and sales volume together.
- Paper economics: look for agro-pulping utilization, OCC substitution, gross-margin durability and receivable days.
- Associate income: separate Unicol’s sugar and ethanol performance and distinguish equity-accounted profit from cash dividends.
- Regulation and tax: sugar deregulation, export policy, levies, super tax and pending tax disputes can change cash and earnings.
- Next-season supply: management’s initial crop survey suggests 15% more cane availability, which could support throughput but deepen price pressure if demand and exports lag.
Overall, the June 2026 result weakened because improved production efficiency met an unfavorable commercial and financing environment. Paper provided a partial operating offset and associate profit helped the nine-month result, but neither compensated for sugar-margin contraction, heavy inventory funding and levies. A durable recovery requires inventory liquidation at viable prices, positive operating cash flow and financing cost falling faster than debt rises.