Verdict
S.S. Oil Mills Limited delivered a much larger and more profitable FY2026, but the year was stronger in reported earnings than in cash generation. Audited net sales rose 74.8% to PKR 13.68 billion and profit after tax increased 60.2% to PKR 401.43 million. Higher soybean availability drove a large increase in oilseed processing and sales volumes, while lower finance cost added meaningful support below operating profit.
The quality check is mixed. Gross and operating margins both slipped, the final quarter ended in a PKR 60.35 million loss, and working-capital absorption pushed annual operating cash flow to negative PKR 665.17 million. Short-term borrowings climbed 56.6% to PKR 1.56 billion. The result is therefore best read as a successful scale-up whose next test is cash conversion, not simply another year of top-line growth.
Results at a glance
Reporting basis: audited standalone financial statements for the year ended June 30, 2026, in Pakistani rupees. SSOM has not presented a consolidated group result in the filing used here.
Net sales: PKR 13.68 billion, up 74.8% from PKR 7.83 billion.
Gross profit: PKR 942.33 million, up 62.6%; gross margin eased to 6.9% from 7.4%.
Operating profit: PKR 840.41 million, up 70.0%; operating margin was 6.1% versus 6.3%.
Profit before tax: PKR 688.47 million versus PKR 295.12 million.
Profit after tax: PKR 401.43 million, up 60.2%; EPS was PKR 70.94 versus PKR 44.29.
Operating cash flow: negative PKR 665.17 million, versus positive PKR 426.57 million.
Final cash dividend: PKR 5.00 per share, or 50% of face value, unchanged from the prior-year rate.
AlphaGen model readout
These are AlphaGen model scores, not company-reported figures and not investment recommendations.
Alpha QoQ Score: 10.66
TTM Performance Score: 53.45
3Y Business Perf Score: 81.99
Sector Leadership Score: 50.47
What improved
Imported soybean availability unlocked much higher throughput
Management identifies improved availability of imported soybean as the principal reason for FY2026’s expansion. Washed-oil production rose to 14,652 metric tons from 7,620 metric tons, an increase of about 92%. Meal and soap production increased to 56,366 metric tons from 30,900 metric tons, or about 82%.
Sales volumes rose even faster in the oil line. Washed-oil sales reached 15,236 metric tons compared with 6,814 metric tons, while meal and soap sales increased to 55,909 metric tons from 30,829 metric tons. This volume evidence supports management’s explanation that revenue growth came primarily from a much larger operating scale rather than an unexplained accounting movement.
The increase transmitted strongly through the income statement. Gross profit rose by PKR 362.84 million and operating profit by PKR 346.02 million. Administrative and selling expenses grew, but far more slowly than revenue, allowing most of the higher gross profit to reach operating profit.
Finance cost fell even as year-end borrowing increased
Finance cost declined 34.9% to PKR 114.97 million from PKR 176.73 million. That PKR 61.77 million reduction was an important part of the profit bridge: profit before tax more than doubled to PKR 688.47 million.
The filing does not quantify how much of the finance-cost decline came from borrowing rates, facility mix or timing. That distinction matters because closing short-term borrowings were much higher than a year earlier. The lower expense is therefore a verified result, but it should not be extrapolated mechanically while debt remains elevated.
The operating cycle became faster on management’s measures
Management reports debtor days improving to about 35 from 41 and inventory days to about 38 from 60. Its approximate cash-conversion cycle shortened to 71 days from 97 days. Those efficiency measures are encouraging because they show that each unit of sales required fewer days in receivables and inventory.
The improvement in days does not mean working capital released cash. The scale of the business rose so sharply that the absolute balances still expanded. This distinction between efficiency and total funding requirement is central to understanding the year.
What weakened / needs attention
Margins narrowed despite the earnings growth
Gross margin fell to 6.9% from 7.4%, a decline of roughly 0.5 percentage point. Operating margin also edged down to 6.1% from 6.3%, while net margin eased to 2.9% from 3.2%. Revenue therefore grew faster than gross profit and profit after tax.
The filing says management balanced seed procurement cost, expected oil and meal realization, crushing economics and customer credit, but it does not publish a complete price-versus-volume bridge. The defensible conclusion is arithmetic: higher throughput produced much greater gross profit in rupees, but unit economics were slightly thinner.
The final quarter was loss-making
The discrete June quarter shows why the low Alpha QoQ Score deserves attention. Quarterly sales were PKR 3.92 billion versus PKR 2.05 billion a year earlier, and gross profit rose to PKR 139.10 million from PKR 74.69 million. Operating profit improved to PKR 117.64 million from PKR 40.13 million.
Despite that operational improvement, the quarter ended with a PKR 60.35 million loss after tax compared with PKR 11.80 million profit in the prior-year quarter. Profit before tax was positive at PKR 39.91 million, but the tax charge was PKR 100.26 million. The quarterly loss therefore arose below the pre-tax line rather than from an operating loss.
For the full year, tax expense increased to PKR 287.04 million from PKR 38.67 million, including PKR 79.07 million of super tax and PKR 36.92 million of deferred tax. The effective burden was roughly 42% of pre-tax profit. Tax normalization is consequently a material issue for the next comparison.
Profit did not convert into operating cash
Profit before working-capital changes was PKR 962.91 million, but current assets absorbed PKR 1.30 billion. Inventory used PKR 556.05 million and trade receivables used PKR 705.31 million. Higher current liabilities provided only a partial offset, leaving net operating cash outflow of PKR 665.17 million versus a PKR 426.57 million inflow in FY2025.
Fixed-asset purchases were PKR 21.25 million. A simple operating-cash-flow-minus-fixed-asset-purchases measure was therefore negative by approximately PKR 686.42 million. This is an annual cash-flow observation; the available disclosure does not support a separate claim about quarterly cash conversion.
Short-term loan inflows of PKR 564.42 million largely financed the gap. After dividend payments and long-term loan repayment, net financing cash inflow was PKR 530.70 million. Cash and bank balances consequently fell to PKR 96.72 million from PKR 220.43 million.
Supply security increased the balance-sheet commitment
Closing stock-in-trade rose 53.0% to PKR 1.60 billion. Management says about PKR 1.05 billion—roughly two-thirds—was soybean inventory in transit. It has also fixed or secured future seed requirements through forward purchase commitments to reduce availability and adverse-price risk on committed quantities.
That strategy improves visibility over raw-material supply and landed cost, but it carries funding and execution risks. Outstanding letters of credit for raw material were PKR 1.13 billion versus PKR 696.32 million a year earlier. Management must balance supply protection against holding cost, shipment timing and crush margins.
Leverage and liquidity require monitoring
Total interest-bearing financing was about PKR 1.60 billion at June 2026, up from PKR 1.04 billion. Short-term borrowings accounted for almost all of it. The debt-to-equity ratio increased to approximately 0.63 times from 0.48 times, even though equity rose 16.4% to PKR 2.53 billion.
Current assets of PKR 3.74 billion still covered current liabilities of PKR 1.99 billion, but the current ratio fell to about 1.88 times from 2.07 times. Trade receivables increased 71.4% to PKR 1.68 billion and trade and other payables nearly tripled to PKR 370.88 million. Liquidity is not in deficit, but a growing share of it is tied up in operating balances rather than cash.
Related-party sales are material
Sales to associated S.S Feed Mills were PKR 3.74 billion, equivalent to roughly 27% of SSOM’s annual revenue. The company says related-party transactions are conducted on an arm’s-length basis and pass through audit-committee and board approval. Even so, the size makes customer concentration, payment discipline and governance around these transactions decision-relevant.
Dividend and capital allocation
PSX’s financial-announcements record and the directors’ report show a 50% final cash dividend, equal to PKR 5.00 per share. With 5.66 million weighted-average shares, the proposed distribution is approximately PKR 28.29 million, only about 7% of reported profit after tax.
The payout is modest relative to earnings, which is prudent given the negative operating cash flow and higher short-term borrowing. Investors should distinguish dividend affordability on the income statement from the cash resources needed to fund the operating cycle.
Longer-run context
SSOM’s recent history has been cyclical. Sales were PKR 6.23 billion in FY2023, fell to PKR 4.52 billion in FY2024, recovered to PKR 7.83 billion in FY2025 and reached PKR 13.68 billion in FY2026. Profit after tax moved from PKR 134.34 million to a PKR 123.00 million loss, then to PKR 250.63 million and PKR 401.43 million.
FY2026 is therefore a genuine earnings recovery and a new scale record in the disclosed four-year series. It is not yet proof of smooth or self-funded growth. The durability question is whether procurement discipline and higher throughput can preserve margins while receivables and inventory stop consuming more cash than the business earns.
What to monitor next
Cash conversion: compare operating cash flow with profit, and watch whether receivable and inventory growth slows relative to sales.
Crush margin quality: track gross margin alongside soybean landed cost, oil and meal realization, and production volumes.
Borrowing and finance cost: closing debt rose sharply even though FY2026 finance expense fell; the next report should reveal whether that favorable expense trend can persist.
Quarterly tax: the June-quarter tax charge converted positive pre-tax profit into a loss. The basis and recurrence of current, super and deferred tax need monitoring.
Forward seed commitments: supply cover reduces availability risk, but shipment timing, inventory in transit and foreign-currency landed cost can increase funding pressure.
Related-party exposure: S.S Feed Mills represented a material share of sales, so collection behavior and disclosure remain important.
Volume follow-through: higher imported-soybean availability drove FY2026. Sustaining production and customer demand without further margin dilution is the operational test.
Bottom line
SSOM’s FY2026 result is strong on scale and reported profit. Imported soybean availability enabled much higher production, profit before tax more than doubled, finance cost declined and the company retained a modest dividend.
The caution lies in the funding underneath that growth. Margins narrowed, the final quarter was loss-making after tax, operating cash flow turned sharply negative and short-term debt financed the expansion in inventory and receivables. A stronger FY2027 result would require not just more sales, but better cash conversion and stable crush economics.