Noon Sugar Mills' nine months to June 2026 were operationally strong but financially weak. The company crushed substantially more cane, produced more sugar and nearly tripled spirit revenue, yet cost growth outpaced sales, the gross margin narrowed and finance cost rose. A PKR 266.5 million profit in the comparable period became a PKR 95.2 million loss. The decisive issue was not production capacity; it was the price and cash cost of carrying a larger output into a surplus sugar market.
Company Name: Noon Sugar Mills Ltd
Ticker: NONS
Reporting period: Nine months and quarter ended June 30, 2026
Reporting basis: Unaudited, company-only (unconsolidated) condensed interim financial statements. Unless stated otherwise, monetary figures are in Pakistani rupees and comparisons are with the corresponding period of 2025. Official nine-month FY2026 report
Verdict
The result was mixed at the operating level and adverse at the bottom line. Nine-month sales rose 10.1%, but cost of sales increased 12.4%, gross profit fell 13.3% and operating profit declined 27.4%. Finance cost then rose 26.4%, leaving only PKR 32.7 million of profit before minimum and final tax levies. Those levies of PKR 127.9 million converted the pre-levy profit into a net loss. The standalone June quarter was weaker still: revenue fell 43.3% and the company lost PKR 204.4 million. Official nine-month FY2026 report
Operational volume therefore did not translate into pricing power or cash conversion. Management attributed the squeeze to higher sugarcane and input costs, surplus domestic sugar, slow inventory lifting, subdued ethanol prices and expensive molasses. These are management's explanations. The financial statements independently confirm the lower margin, distillery loss, inventory build and heavier short-term borrowing.
AlphaGen model readings
Alpha QoQ Score: 4.64
TTM Performance Score: 68.76
3Y Business Perf Score: 36.01
Sector Leadership Score: 16.9017
These four readings are AlphaGen model outputs, not company-reported financial figures. They should be read alongside the official financial and operating evidence below.
Nine-month comparison: current period, prior period and meaning
Net sales
Current: PKR 10.320 billion. Prior: PKR 9.374 billion. Change: up 10.1%. Interpretation: higher sugar production and much stronger spirit sales outweighed weaker local sugar revenue and the absence of sugar exports. Revenue note
Gross profit and margin
Current gross profit: PKR 731.0 million. Prior: PKR 842.9 million. Change: down 13.3%. Gross margin fell to 7.08% from 8.99%, a contraction of 1.91 percentage points. Cost of sales rose faster than revenue, showing that additional volume carried less contribution per rupee of sales.
Operating profit
Current: PKR 612.0 million. Prior: PKR 843.5 million. Change: down 27.4%. Distribution and marketing expense more than doubled to PKR 317.9 million, while administrative expense rose 13.8% to PKR 334.2 million. Other income increased 15.2% to PKR 535.6 million, but could not offset the weaker gross result and higher operating costs.
Finance cost and pre-levy profit
Finance cost increased 26.4% to PKR 579.3 million from PKR 458.2 million. Profit before minimum and final tax levies fell 91.5% to PKR 32.7 million from PKR 385.3 million. The financing charge consumed almost all the remaining profit after operations.
Net result and earnings per share
The company recorded a PKR 95.2 million net loss versus PKR 266.5 million profit. Loss per share was PKR 5.77 compared with earnings per share of PKR 16.13. Minimum and final tax levies were PKR 127.9 million, 7.7% higher than the comparable period, and exceeded the pre-levy profit. Official results letter
More cane and sugar, but weaker unit economics
The sugar division ran for 122 days compared with 104 days. Cane crushed increased 48.9% to 950,643 metric tons, sugar production rose 51.7% to 96,798 metric tons and average sucrose recovery improved to 10.19% from 10.00%. Molasses production also rose to 41,632 metric tons from 28,369 metric tons. These are clear production gains and indicate that the mill extracted slightly more sugar from each ton of cane. Directors' operating review
The economics were less favourable. Sugar segment gross sales, which include inter-segment sales, were PKR 8.371 billion versus PKR 9.147 billion. Segment gross profit was broadly flat at PKR 702.0 million versus PKR 709.6 million, but the company had to process nearly half as much cane again to reach that outcome. Management cited materially higher cane procurement and input costs. It also said surplus domestic sugar suppressed selling prices and slowed stock lifting.
External local sugar revenue fell 2.7% to PKR 7.224 billion, while the prior period included PKR 881.8 million of sugar exports and the current period included none. This explains why record production did not automatically create equivalent revenue growth. More unsold output instead accumulated in stock-in-trade, shifting the burden from the income statement to the balance sheet and cash flow.
Distillery revenue expanded, but profitability deteriorated
The distillery operated for 177 days versus 174 days, processed 67,811 metric tons of molasses versus 65,568 metric tons and improved average yield to 247 litres per metric ton from 245 litres. Spirit revenue rose 189.6% to PKR 3.095 billion. Export spirit revenue increased 187.7% to PKR 2.976 billion, while local spirit revenue rose to PKR 119.6 million from PKR 34.5 million. Revenue and operating notes
Yet the distillery's gross profit dropped to PKR 29.0 million from PKR 133.3 million. After distribution and administrative costs, its segment loss before unallocated items widened to PKR 366.2 million from PKR 58.6 million. The gap between export-led revenue growth and falling segment profit is economically important: higher turnover did not compensate for subdued ethanol pricing, costly molasses and much higher distribution expense. Management identified the first two factors; the segment table establishes the resulting loss.
Other income: stronger by-products, no repeat of the land gain
Other income rose to PKR 535.6 million from PKR 465.0 million, but its composition changed. Bagasse, press mud, scrap and fusel-oil sales increased to PKR 507.5 million from PKR 128.5 million. The prior period included a PKR 313.7 million gain on the sale of a plot; there was no comparable land gain in the current period. A small PKR 6.4 million gain on other fixed assets was recorded. Other-income note
This distinction improves comparability. The current period's other income was supported mainly by by-products generated alongside sugar and distillery operations, whereas the prior period contained a large asset-sale gain. Even after that shift, the company could not overcome the gross-margin squeeze, segment costs and finance burden.
The June quarter shows the deterioration accelerated
For the quarter alone, sales fell 43.3% to PKR 1.983 billion from PKR 3.494 billion. Gross profit dropped 77.6% to PKR 111.6 million, and gross margin fell to 5.63% from 14.28%. Operating profit declined 84.3% to PKR 62.4 million, while finance cost rose 13.1% to PKR 248.0 million. The result reversed from a PKR 133.0 million profit to a PKR 204.4 million loss. This quarter explains why the profitable half-year did not survive through June. Official nine-month FY2026 report Half-year FY2026 report
Balance sheet and working-capital pressure
Total assets increased 34.0% from September 2025 to PKR 11.365 billion, driven mainly by current assets. Stock-in-trade rose 140.8% to PKR 5.272 billion, equal to nearly half of total assets. Trade debts fell to PKR 96.7 million from PKR 234.9 million, loans and advances fell to PKR 381.7 million from PKR 845.9 million, and cash increased to PKR 259.1 million from PKR 59.0 million.
The liability side reveals how the inventory was funded. Short-term finance rose 137.9% to PKR 6.707 billion from PKR 2.819 billion. Accrued mark-up increased to PKR 268.7 million from PKR 74.6 million. Long-term finance declined 17.7% to PKR 905.0 million, but that reduction was overwhelmed by the increase in short-term borrowing. Current assets covered only about 0.80 times current liabilities, compared with 0.75 times at September 2025. Liquidity therefore improved slightly by that ratio while remaining structurally tight.
Cash flow: inventory converted profit into borrowing
Before working-capital changes, operations generated PKR 978.1 million, up from PKR 752.3 million. The cash-flow reversal occurred after a PKR 3.082 billion increase in stock-in-trade and a PKR 981.6 million reduction in trade and other payables and contract liabilities. Net operating cash flow was consequently negative PKR 2.671 billion versus positive PKR 432.0 million. Cash-flow statement
The funding response was PKR 3.888 billion of net short-term financing. The company also repaid PKR 194.4 million of long-term finance, paid PKR 385.3 million of finance cost and spent PKR 382.9 million on property, plant and equipment. Net financing cash inflow of PKR 3.243 billion allowed cash to end at PKR 259.1 million, but the source of that cash was borrowing rather than inventory liquidation.
AlphaGen inference: the central question for the next quarter is whether stock converts into receivables and cash quickly enough to reduce short-term finance. If sugar is sold at weak prices, inventory can release cash but crystallize a thin margin; if stock remains unsold, financing cost continues to compound. Volume is therefore secondary to the selling price and timing of the cash release.
Dividend and corporate actions
The board recommended no cash dividend, bonus shares, rights issue or other entitlement for the third-quarter result. The nine-month equity statement nevertheless records payment of the previously declared PKR 4 per share cash dividend for the year ended September 2025. Official results letter Official nine-month FY2026 report
Risks and what to monitor next
The immediate risks are domestic sugar oversupply, weak realized selling prices, high cane procurement costs, subdued ethanol prices, export-market logistics, expensive working capital and tax levies that can exceed accounting profit. The distillery's sharp loss also means readers should not treat stronger spirit exports as evidence of better economics without checking segment margin.
Management said preliminary surveys indicated 10%-15% more sugarcane cultivation in its region for the next crushing season and expressed hope that surplus sugar exports would be allowed. Those are management expectations, not confirmed outcomes. More cane can support utilization, but it can also increase inventory and financing needs if domestic demand and exports do not absorb production.
The most useful next-period indicators are sugar inventory and its realized price, short-term finance, finance cost, operating cash flow, cane price, sucrose recovery, spirit export revenue and the distillery segment margin. Improvement would require more than another production record: it would require inventory release, positive cash conversion and a recovery in gross profit after financing and tax levies.
Sources
Noon Sugar Mills nine-month report for the period ended June 30, 2026
Official third-quarter results letter dated July 27, 2026