Engro Holdings Delivers Stronger Core Performance Despite Challenging First Half
Engro Holdings Limited maintained its focus on long-term value creation during the first half of 2026, navigating geopolitical uncertainty, volatile energy markets and changing economic conditions while strengthening the underlying performance of its business portfolio.
For the half year ended June 30, 2026, the company reported consolidated profit after tax (PAT) of Rs30.44 billion, compared with Rs69.33 billion in the same period last year. Profit attributable to owners of the holding company stood at Rs18.62 billion, against Rs31.58 billion a year earlier, while earnings per share (EPS) declined to Rs15.48 from Rs26.23.
However, the headline decline does not fully reflect the performance of the group’s underlying businesses. The previous year’s results included significant one-off effects, including a reversal of impairment related to thermal energy assets. Excluding these effects, owners’ share of profit improved from Rs10.41 billion to Rs18.62 billion in the current period. The company attributed the improvement to the full-period inclusion of Deodar and better performance across other group businesses.
Diverse Portfolio Supports Earnings
Engro’s diversified portfolio helped the group manage a difficult operating environment. According to the half-year report, power and mining remained the largest contributor to owners’ share of profit at Rs8.81 billion, up from Rs6.71 billion in the corresponding period. Fertilizer contributed Rs4.01 billion, while connectivity and telecom contributed Rs3.87 billion after reporting a loss in the previous year’s period.
The polymers business also staged a notable recovery, moving to a profit of Rs915 million for the owners’ share compared with a loss of Rs1.82 billion in the first half of 2025. The improvement was mainly attributed to better PVC margins and higher HPO sales.
Fertilizer Business Faces Global Pressure
The fertilizer business continued to benefit from resilient domestic urea demand, supported by improved water availability and favorable farm economics. At the same time, higher gas costs and rising input expenses remained challenges for margins.
The international phosphate market was more difficult, with DAP prices rising sharply because of disruptions in global trade flows, production curtailments in Morocco and continuing Chinese export restrictions. Higher prices affected farmer affordability and moderated demand, particularly during the second quarter.
Engro said it continued to ensure product availability through timely imports while adopting a cautious pricing strategy to reduce pressure on farmers.
Telecom Infrastructure Offers Long-Term Growth Potential
Engro’s telecom infrastructure portfolio now comprises more than 15,000 tower sites, with the business increasingly focused on improving utilization rather than simply expanding the tower footprint. The tenancy ratio stood at 1.35 times, highlighting the opportunity to generate additional returns through greater colocation.
The expected rollout of 5G could provide another growth avenue as rising data consumption creates demand for network densification, additional fibre connectivity and higher power requirements.
Sustainability initiatives are also expanding. Around 50% of Enfrashare’s sites have been solarized, while Deodar solarized 1,000 sites during the last year, supporting energy resilience and operating efficiency.
Energy Portfolio Remains a Key Strength
Engro’s energy assets continued to generate stable cash flows, supported by strong collections and availability-based returns. The group highlighted the strategic importance of its domestic energy resources, particularly the Thar value chain and Qadirpur power plant, which help reduce reliance on imported fuels.
The Phase III expansion at SECMC is progressing according to plan and is expected to further strengthen the Thar ecosystem and its contribution to Pakistan’s energy security.
Terminal Business Faces Lower Utilization
The terminals business faced pressure during the period as lower LNG imports, reduced terminal utilization and weaker chemical handling volumes affected profitability. The business also faced the impact of a higher minimum tax rate on Engro Elengy.
Nevertheless, Engro Vopak achieved an important long-term milestone with the renewal of its Implementation Agreement for another 30 years. The company views the terminal as strategically important to Pakistan’s energy and industrial infrastructure.
Foods and Trading Businesses Show Improvement
The trading business delivered stronger topline performance during the first half, supported by higher volumes and improved margins across key product categories. Diversification of products and sourcing channels also helped the business navigate supply-chain disruptions and commodity market volatility.
Meanwhile, the foods business recorded improved profitability, helped by growth in value-added products, pricing initiatives, lower finance costs and efficiency gains.
The packaged dairy market, however, continues to face challenges from consumer preference for loose milk and the sales tax differential between packaged and loose products. Engro said it remains focused on expanding its value-added dairy portfolio, distribution network and market penetration.
Share Buyback Replaces Interim Dividend
Engro Holdings did not declare an interim cash dividend for the period. Instead, the company continued to return capital through its share buyback program.
As of July 27, 2026, approximately 21 million shares had been repurchased at an average price of Rs281.68 per share, representing around 47% of the approved buyback mandate.
The company said the buyback provides flexibility to repurchase shares when they trade below its assessment of intrinsic value, potentially increasing continuing shareholders’ participation in future cash flows.
Outlook Remains Focused on Resilience
Looking ahead, Engro expects its businesses to operate against a backdrop of geopolitical uncertainty, energy-market volatility and changing trade dynamics. The company says its priority will remain operational discipline, financial strength and careful capital allocation rather than attempting to predict external events.
Domestic urea demand is expected to remain robust ahead of the Rabi season, although fertilizer margins will remain sensitive to input costs and DAP prices. The polymers business faces continued pressure from regional oversupply and Chinese exports, while the towers business is expected to benefit from greater network utilization and the expansion of digital connectivity.
For the energy portfolio, the company expects relatively stable performance, while the terminals business remains exposed to LNG supply and geopolitical disruptions. Foods demand, meanwhile, will continue to depend heavily on consumer purchasing power and affordability.
Overall, Engro Holdings’ first-half results present a mixed headline but a more encouraging picture underneath. While reported profit was lower because of the absence of last year’s substantial one-off gains, underlying owners’ earnings improved significantly. With exposure to essential sectors including food, energy, fertilizers and infrastructure, the company says it remains committed to building sustainable cash flows and creating long-term shareholder value through disciplined capital allocation.
