Engro Holdings Reports Increased Earnings Amidst Ongoing Merger

Karachi: Engro Holdings Ltd. (ENGROH) has announced its financial results for the fourth quarter of the calendar year 2024, reporting consolidated earnings of PKR 5.8 billion, an increase from PKR 5.3 billion in the same period last year. The company, however, decided to skip the final dividend due to its ongoing merger, which took effect on January 1, 2025.

According to a statement by AKD Securities Limited, the earnings report is based on the previous Dawood Hercules holding structure and will transition to a new structure starting next quarter. The decision to forego the final dividend is attributed to the merger process.

The fertilizer segment, EFERT, experienced an 8% year-on-year decline in earnings, totaling PKR 10.3 billion for 4QCY24. This decrease was primarily due to higher selling and distribution expenses and reduced other income. Despite an annual increase in segment revenue—propelled by a 17% and 24% year-on-year rise in urea offtakes and prices, respectively—gross margins contracted by 3.8 percentage points, as a 56% surge in input gas prices overshadowed the growth in selling prices.

In contrast, EPCL’s profitability saw a 40% year-on-year decline in the fourth quarter, driven by reduced gross margins and heightened finance costs. A significant rise in captive and process gas prices contributed to a 12.8 percentage point contraction in gross margins. Finance costs increased seven-fold to PKR 1.8 billion due to a one-off reversal in the same period last year and a rise in outstanding debt.

Enfrashare’s financial loss is expected to decrease to PKR 30 million, with finance costs projected to fall by 18% year-on-year to approximately PKR 1.4 billion, despite increased borrowing, due to a reduction in financing rates.

Meanwhile, FCEPL added PKR 74 million to the final quarter’s profitability, reversing a loss of PKR 27 million from the same period last year. This improvement is attributed to enhanced gross margins from higher prices and reduced finance costs following a decline in the KIBOR rate.

Engro Holdings maintains a ‘BUY’ stance on its stock, forecasting profitability growth from existing operations, expansion into the telecom tower business, and declining financing rates to boost future prospects. The target price for December 2025 is set at PKR 301 per share.