Engro Holdings Limited (PSX: ENGROH) reported a 56% decline in consolidated net profit for the half year ended June 30, 2026, as higher finance costs, increased tax-related levies and the absence of exceptional gains recorded in the previous year weighed on its bottom line. The company posted a profit for the period of Rs30.44 million in 1HCY26, compared with Rs69.33 million in the corresponding period of 2025.
The decline in earnings came despite moderate growth in the company’s revenue and a notable improvement in gross profit. Engro Holdings’ revenue increased 4.86% year on year to Rs259.26 million during the period, compared with Rs247.26 million a year earlier. At the same time, the cost of revenue declined 2.67% to Rs186.59 million from Rs191.71 million. This combination lifted gross profit by 30.84% to Rs72.68 million, compared with Rs55.55 million in the same period of the previous year.
The company also recorded changes in its operating expenses during the six-month period. Selling and distribution expenses increased 14.37% to Rs6.70 million from Rs5.86 million. In contrast, administrative expenses declined sharply by 35.98% to Rs8.46 million from Rs13.21 million. Other operating expenses also fell 45.81% to Rs1.69 million from Rs3.11 million. Other income remained broadly stable but declined 2.77% to Rs5.62 million from Rs5.78 million.
Several items below the gross profit line contributed to the weaker operating result. The gain on subsidy receivable from the Government of Pakistan fell 86.24% to Rs26,521 from Rs192,799. The company, however, recorded a remeasurement gain on provision for SIDC amounting to Rs3.15 million during the current period, whereas no comparable amount was recorded in the previous year.
A major difference between the two periods was the absence of exceptional gains related to thermal assets. During 2025, Engro Holdings recorded an adjustment in respect of the carrying value of thermal assets amounting to Rs35.76 million and a remeasurement gain on the carrying value of thermal assets of Rs24.10 million. Neither item was recorded during the six months ended June 30, 2026. The absence of these gains significantly affected the year-on-year comparison.
As a result, operating profit declined 34.84% to Rs64.63 million from Rs99.19 million in the corresponding period last year. The pressure continued below the operating level as finance costs increased 31.94% to Rs23.79 million from Rs18.03 million. Meanwhile, the company’s share of income from joint ventures and associates declined 14.30% to Rs4.11 million from Rs4.79 million.
These movements brought profit before income tax, minimum tax and final tax down 47.70% to Rs44.95 million from Rs85.96 million. The levy for minimum tax and final tax also increased substantially, rising 148.05% to Rs6.13 million from Rs2.47 million. Consequently, profit before income tax declined 53.50% to Rs38.82 million compared with Rs83.48 million in the prior-year period.
Income tax provided some relief, falling 39.65% to Rs8.38 million from Rs13.88 million. Despite the lower income tax expense, profit from continuing operations dropped 56.27% to Rs30.44 million from Rs69.60 million. The company recorded no loss from discontinued operations during the current period, compared with a loss of Rs273,874 in 2025. This resulted in total profit for the period of Rs30.44 million, down 56.09% year on year.
The earnings decline was also reflected in the company’s earnings per share. Basic and diluted EPS from continuing operations fell to Rs15.48 from Rs26.46, representing a decline of 41.50%. Total EPS also stood at Rs15.48 compared with Rs26.23 in the corresponding period last year, a decline of 40.98%.
The distribution of earnings between shareholders also changed significantly. Profit attributable to owners of Engro Holdings declined 41.04% to Rs18.62 million from Rs31.58 million. Meanwhile, profit attributable to non-controlling interests fell 68.69% to Rs11.82 million from Rs37.74 million.
Overall, Engro Holdings entered the second half of 2026 with higher revenue and stronger gross profitability, but the improvement at the gross level was not enough to offset lower exceptional gains, higher finance costs and a substantial increase in minimum and final tax. The resulting decline in operating and pre-tax earnings translated into a 56% contraction in consolidated profit for the first half of the year.
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