Engro Reports Rs7.1 Billion Profit Despite 34% Sales Collapse

KARACHI: Engro Fertilizers approved another interim dividend on Wednesday. Rs1.75 per share, 17.5%. The board cleared it at a meeting held July 29 in Karachi, on top of the Rs2.00 per share already paid earlier this year. Total payout for the half now stands at Rs3.75 per share.

Engro Fertilizer Profit Falls

The numbers behind that dividend aren't pretty. Quarterly net sales fell to Rs33.06 billion, down from Rs50.40 billion a year ago a drop of roughly a third. Half-year sales came in at Rs70.85 billion, against Rs80.69 billion last year.

Profit fell with it. Six-month profit landed at Rs7.12 billion, down from Rs8.46 billion. Earnings per share slid to Rs5.33 from Rs6.34. Look at the quarter alone and it's worse: Rs3.80 billion, compared to Rs5.57 billion in April-June 2025.

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One item kept things from looking even grimmer. A Rs1.8 billion remeasurement gain on the company's Sindh Infrastructure Development Cess provision landed in the books this quarter, a one-off that papered over a chunk of the decline. Finance costs went the other way, climbing to Rs3.29 billion for the half from Rs2.86 billion last year.

Debt tells its own story. Long-term borrowings jumped to Rs42.83 billion by June 30, up from Rs29.45 billion in December. Short-term borrowings hit Rs47.86 billion. Cash and cash equivalents actually went negative minus Rs6.12 billion at period-end. The company now owes more on short-term facilities than it holds in the bank.

Where's the money going? Capital spending. Engro spent Rs14.84 billion on property, plant and equipment in the first half of 2026 more than four times the Rs3.41 billion it spent the same period last year. Its plant and equipment on the books grew from Rs92.39 billion to Rs105.30 billion in six months. Something big is being built or upgraded, and it's running on borrowed money, not cash from operations.

The question now is simple: does this spending spree pay off before the debt bill comes due, or does Engro keep funding dividends on borrowed cash while sales keep sliding?