KARACHI: Engro Holdings Limited (ENGROH) announced its financial results for the nine months ended September 30, 2025, posting a consolidated profit attributable to equity holders of Rs42 billion, translating into earnings per share (EPS) of Rs34.9, a 6.6-fold increase year-on-year.
The sharp rise includes a one-off adjustment related to the company’s thermal power asset. Excluding this adjustment, the profit attributable to owners would have amounted to Rs15.2 billion (EPS: Rs12.6).
For the third quarter of 2025, Engro Holdings reported a profit of Rs6.4 billion (EPS: Rs5.4), which came in below analyst expectations due to higher-than-anticipated finance costs and a significant rise in the effective tax rate (ETR). The company’s ETR stood at 47 percent in 3Q2025, compared with 12 percent in the preceding quarter, primarily because of the full consolidation of Deodar, which falls under the minimum turnover tax regime.
The management highlighted that the Finance Act 2025 increased the minimum turnover tax rate for the LNG terminal business from 9 percent to 15 percent, pushing the ETR for this segment to between 75 and 80 percent. Similarly, the rate for the connectivity business rose from 4 percent to 6 percent, resulting in an ETR of around 60 percent. Company officials expressed concerns to regulators that these capital-intensive service sectors should be taxed differently to support investment and operational viability.
At the subsidiary level, Engro Fertilizers Limited (EFERT) recorded a 21 percent year-on-year decline in sales to Rs135 billion during 9M2025, driven by lower urea offtakes and price discounts. Urea volumes fell 3 percent to 1.28 million tons in the same period. However, management noted that improved farm economics and farmer liquidity are expected to lift fertilizer demand during the Rabi season, potentially helping reduce inventory and borrowing levels. Discussions are also under way at the ministerial level to shift all fertilizer producers to a single gas network to ensure supply security and support the agriculture sector.
In the petrochemicals segment, Engro Polymer and Chemicals Limited (EPCL) posted a 6 percent increase in revenue to Rs58 billion, supported by strong domestic demand. However, the subsidiary reported a loss of Rs3.5 billion due to weaker international PVC prices and elevated energy costs.
Engro Elengy Terminal and Engro Vopak handled 55 LNG cargos during the period with operational availability exceeding 98 percent, though throughput declined 3 percent year-on-year amid subdued chemical handling volumes. Profitability in this segment remained under pressure from higher taxes imposed under the Finance Act 2025.
Engro Powergen Qadirpur Limited (EPQL) saw its earnings fall 70 percent year-on-year to Rs851 million, reflecting lower dispatch levels and reduced capacity payments following changes in its power purchase agreement. The company said it is evaluating options to source low BTU gas from other fields to enhance plant utilization. Meanwhile, the Engro Powergen Thar Limited (EPTL) investment continued to yield dividends as recoveries improved and remained close to 100 percent.
In the trading business, Engro Eximp FZE achieved a 1 percent year-on-year revenue growth, with its third-party trade ratio rising sharply to 48 percent in 9M2025 from 22 percent in the same period last year.
Engro’s consumer subsidiary, FrieslandCampina Engro Pakistan Limited (FCEPL), posted a 3 percent decline in topline revenue to Rs80 billion, reflecting weakness in the packaged milk category. Nonetheless, profitability improved 4 percent year-on-year, supported by a better product mix and cost optimization initiatives.
Engro Holdings’ management emphasized that the group remains focused on long-term investment in energy, agriculture, and connectivity sectors while addressing regulatory challenges in taxation and gas allocation.
At current market levels, ENGROH is trading at 2025E and 2026F price-to-earnings multiples of 5.2x and 6.7x, respectively, reflecting continued investor interest despite near-term margin pressures.
Copyright Business Recorder, 2025
