Engro Holdings Limited reported a consolidated profit after tax (PAT) of PKR 30.44 billion for the half year ended June 30, 2026, down from PKR 69.33 billion in the same period last year. The company attributed much of the year-on-year decline to the absence of significant one-off gains recorded in the previous period.
The company’s owners’ share of profit stood at PKR 18.62 billion, compared with PKR 31.58 billion a year earlier, while earnings per share (EPS) declined to PKR 15.48 from PKR 26.23. However, Engro Holdings said that after excluding one-off impacts, owners’ share of profit improved significantly from PKR 10.41 billion to PKR 18.62 billion, reflecting stronger underlying performance.
Stronger Core Earnings Offset One-Off Comparison
The company noted that the previous year’s results benefited from a reversal of impairment related to thermal energy assets, while transaction costs associated with the Deodar deal partially offset that gain. With these exceptional items removed, the company’s core earnings showed considerable improvement, supported by the full-period inclusion of Deodar and better results from other group companies.
The segment breakdown also highlights the changing contribution of Engro’s portfolio. Power and mining remained the largest contributor, generating consolidated PAT of PKR 16.61 billion during the period, compared with PKR 14.19 billion a year earlier. Connectivity and telecom also moved into profit, reporting PKR 3.87 billion against a loss of PKR 2.70 billion previously. Polymer earnings recovered to PKR 1.63 billion from a loss of PKR 3.23 billion.
Fertilizer Business Faces Cost and Pricing Pressures
Engro’s fertilizer operations continued to benefit from resilient domestic urea demand, supported by improved water availability and favorable farm economics. However, higher gas costs, increased inventories and elevated input costs remained key concerns.
The phosphate market faced greater pressure as DAP prices increased sharply amid international trade disruptions, production curtailments and Chinese export restrictions. Engro maintained product availability through timely imports while adopting a cautious pricing strategy to limit the impact on farmers.
Polymer Business Returns to Profit
The polymers business recorded a significant turnaround during the first half of 2026. The improvement was mainly attributed to stronger PVC margins and higher HPO sales.
The business continued to operate amid volatility in global PVC and ethylene markets, although conditions became more stable toward the end of the reporting period. Engro also confirmed that Lotte Chemical Pakistan had expressed interest in acquiring Engro Corporation’s shareholding in EPCL, with discussions ongoing.
Telecom Infrastructure Offers Growth Potential
Engro’s telecom infrastructure portfolio now includes more than 15,000 tower sites, with the company focusing on increasing tenancy and maximizing the use of its existing network. The tenancy ratio stood at 1.35 times.
The company expects the rollout of 5G, rising data consumption and demand for high-speed connectivity to create additional opportunities for tower utilization, fiber connectivity and network expansion. Solarization is also progressing, with around 50% of Enfrashare sites solarized and Deodar having solarized 1,000 sites during the last year.
Energy Portfolio Continues to Provide Stable Cashflows
Engro said its energy portfolio continued to generate stable cashflows, supported by strong collections and availability-based returns. The Thar value chain and Qadirpur power plant remain important components of the company’s domestic resource strategy and Pakistan’s energy security.
The Phase III expansion at SECMC is progressing according to plan and is expected to strengthen the long-term value of the Thar ecosystem.
Terminals Remain Under Pressure
The terminals business faced weaker profitability during the period because of lower LNG imports, reduced terminal utilization, lower chemical handling volumes and a higher minimum tax rate.
Despite these near-term challenges, Engro Vopak secured renewal of its Implementation Agreement for another 30 years. The company considers the terminal strategically important to Pakistan’s port, energy and industrial infrastructure.
No Interim Dividend, Buyback Continues
Engro Holdings did not declare an interim cash dividend for the six months ended June 30, 2026. Instead, the company continued returning capital to shareholders through its share buyback program.
As of July 27, approximately 21 million shares had been repurchased at an average price of PKR 281.68 per share, representing around 47% of the approved buyback mandate. Management said the buyback provides flexibility to increase continuing shareholders’ participation in future cashflows when the company’s shares trade below its assessment of intrinsic value.
Outlook Remains Focused on Long-Term Value
Engro expects its businesses to continue facing geopolitical uncertainty, energy-market volatility and changing trade conditions. Nevertheless, management remains focused on operational discipline, prudent capital allocation and preserving the long-term earning power of its diversified portfolio.
The company expects domestic urea demand to remain robust, while polymers may continue to face pressure from regional oversupply and Chinese exports. The towers business is positioned to benefit from expanding digital connectivity, while the energy portfolio is expected to remain relatively stable. Terminals may face near-term pressure from LNG supply disruptions, while foods demand will remain sensitive to consumer purchasing power and the pricing gap between packaged and loose milk.
Overall, Engro Holdings’ first-half results show a headline decline in profit but a stronger underlying performance when exceptional items are excluded. The company’s strategy remains centered on building sustainable cashflows, maintaining financial flexibility and allocating capital toward opportunities capable of generating long-term shareholder value.
