Sugar mills face margin hit as ethanol curbs and cane costs rise
In short
Sugar mills are under pressure because ethanol curbs are reducing their cushion and cane costs are rising. Crisil Ratings expects operating margins to fall by 140 to 160 basis points this fiscal.
What the reporting says
Sugar mills are facing pressure on margins as ethanol curbs reduce their ethanol cushion and higher cane costs add strain. Crisil Ratings expects operating margins to shrink by 140 to 160 basis points this fiscal. The earnings squeeze could weigh on sugar companies' profitability this year.
Why it matters
Sugar mills are seeing margin pressure as ethanol curbs and higher cane costs hit earnings, according to Crisil Ratings. The rating agency expects operating margins to shrink by 140 to 160 basis points in the current fiscal year. The story is relevant for sugar companies because it points to weaker profitability from both pricing and input-cost pressures.