Engro Holdings’ Third Quarter Earnings Fall Short of Expectations Due to Higher Costs

Karachi: Engro Holdings Ltd. (ENGROH) reported its third-quarter earnings for the calendar year 2025, revealing a consolidated profit of PkR6.4 billion, or PkR5.35 per share, up 13% compared to the same period last year. However, earnings fell short of expectations, mainly due to increased finance costs and taxation.

The energy segment, represented by Engro Energy Ltd. (EEL), made a significant contribution of PkR5.0 billion, translating to PkR4.1 per share, according to estimates. Meanwhile, EFERT’s earnings declined by 32% to PkR5.8 billion, primarily owing to increased repair and maintenance expenses and lower DAP sales.

EPCL showed improvement with losses narrowing by 68% to PkR222 million from PkR698 million in the same period last year. This was attributed to higher volumes, improved pricing, and reduced finance costs due to lower interest rates. The Elengy terminal is projected to post a profit of PkR1.0 billion, while FCEPL added PkR309 million to the company’s profitability.

Taxation stood higher than anticipated with an effective tax rate of 47%, up from approximately 37% the previous year, likely due to the imposition of a minimum turnover tax.

For the first nine months of 2025, Engro reported earnings of PkR42.0 billion, or PkR34.9 per share, marking a fourfold increase year-over-year. This surge is largely attributed to a PkR27 billion accounting impact from reclassifying the energy portfolio to continued operations.

Despite the current challenges, AKD Securities Limited maintains a ‘Buy’ stance on Engro Holdings, citing potential profitability growth from existing segments and future expansion into the telecom sector, alongside favorable energy sector reforms and declining interest rates. The target price for December 2025 is set at PkR301 per share.