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KARACHI, July 30, 2026: Engro Fertilizers Limited (EFERT) reported a 32% year-on-year decline in consolidated profit for the second quarter of 2026, although earnings exceeded market expectations due to a one-off gain related to the Sindh Infrastructure Development Cess (SIDC).
The company posted a quarterly profit of Rs3.8 billion, translating into earnings per share (EPS) of Rs2.85, down from a year earlier but up 14% quarter-on-quarter. First-half earnings reached Rs7.1 billion, or Rs5.33 per share, down 16% from the same period last year.
The stronger-than-expected result was mainly driven by a Rs1.8 billion one-time discounting gain linked to SIDC income.
Meanwhile, net sales declined 34% year-on-year and 13% quarter-on-quarter to Rs33.1 billion in the April-June period, reflecting weaker fertilizer demand.
Urea sales dropped 41% year-on-year to 254,000 tons, while DAP sales plunged 68% to 18,000 tons. Consequently, first-half revenue fell 12% to Rs70.9 billion.
Despite lower sales, the company’s gross margin improved to 35.8%, the highest level in 10 quarters, compared with 31.4% a year earlier. The improvement followed a Rs100 per bag increase in urea prices implemented in April 2026.
Other income fell 68% year-on-year to Rs413 million, while first-half other income declined 50%.
At the same time, distribution expenses rose 15% to Rs3.9 billion, largely due to higher fuel costs. Finance costs also increased 6% year-on-year to Rs1.9 billion, reflecting higher borrowing expenses.
The company recorded a tax expense of Rs2.8 billion, representing an effective tax rate of 42%, compared with 40% in the same quarter last year.
Alongside the results, Engro Fertilizers announced a second interim cash dividend of Rs1.75 per share, taking the total dividend for the first half of 2026 to Rs3.75 per share. The first-half payout ratio stood at 70%, compared with 103% a year earlier.
Despite the earnings decline, analysts maintained a “Buy” recommendation on the stock, citing stronger-than-expected quarterly results and improving margins.
