Engro Holdings 4Q profit rises to Rs13.6bn

Lower tax rate lifts earnings; no dividend announced

Engro Holdings Limited reported a consolidated profit attributable to equity holders of Rs13.6 billion for the fourth quarter of 2025, exceeding market expectations due to a sharply lower effective tax rate.

The company posted earnings per share of Rs11.31 in 4Q2025 compared with Rs6.5 billion and EPS of Rs13.57 in the same quarter last year. The result came in above estimates, primarily driven by a lower-than-expected effective tax rate.

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For the full year 2025, Engro Holdings’ profit attributable to owners surged to Rs55.6 billion, translating into EPS of Rs46.20, compared with Rs12.9 billion and EPS of Rs26.78 in 2024. However, the annual figure includes a one-off impairment reversal related to thermal energy assets.

Excluding the accounting adjustment, normalized owner’s profit stood at Rs29 billion, with EPS of Rs24.13. The reversal stems from the termination of a share purchase agreement for the divestment of the company’s thermal energy business. Engro had earlier booked impairment adjustments while planning to exit the segment, which were reversed after the deal was called off.

Among key subsidiaries, Engro Fertilizers Limited posted earnings of Rs8.4 billion in 4Q2025, down 19% year-on-year. The decline was mainly attributed to lower gross margins and the impact of a super tax adjustment.

Engro Polymer and Chemicals Limited reported a consolidated loss of Rs446 million in the quarter, compared with a profit of Rs2.1 billion in the same period last year. The company’s gross margins narrowed sharply to 5.5% in 4Q2025 from 14.1% a year earlier and 11.3% in the preceding quarter, reflecting pressure on product pricing and input costs.

At the holding company level, Engro booked a reversal of Rs1.3 billion in administrative expenses during the quarter, possibly due to cost reclassification. Meanwhile, other expenses increased by 103% year-on-year, partially offsetting the impact of lower administrative charges.

The effective tax rate for 4Q2025 dropped to 18%, compared with 27% in 4Q2024 and 47% in the third quarter of 2025. Market sources indicate the reduction was driven by a tax reversal in the tower business. On a full-year basis, the effective tax rate declined to 23% in 2025 from 40% in 2024, providing a substantial boost to bottom-line growth.

Despite stronger earnings, Engro Holdings did not announce any cash dividend alongside the results. The company is reportedly conserving liquidity to finance its planned acquisition in the telecom tower business, signaling a shift in capital allocation priorities toward expansion.

Engro Holdings remains one of Pakistan’s largest conglomerates, with diversified interests spanning fertilizers, polymers, energy, and infrastructure. The group has undergone strategic restructuring in recent years, focusing on asset optimization and high-return businesses.

Analysts maintain a positive outlook on the stock, citing attractive valuations. The company is currently trading at a forward price-to-earnings multiple of 7.5x for 2026 estimates and 6.0x for 2027 forecasts, reflecting investor expectations of stable earnings growth.

Engro Holdings’ 4Q2025 performance underscores the impact of tax adjustments and portfolio restructuring on earnings momentum, while upcoming investments in the tower segment may shape the group’s growth trajectory in the coming years.