Karachi: Engro Fertilizer Limited announced its financial results for the third quarter of 2026, reporting a consolidated quarterly profit of Rs9.1 billion, translating to earnings per share (EPS) of Rs6.83. This marks a 12% year-over-year decrease and a 2% decline from the previous quarter. The company's earnings for the first nine months of 2026 amounted to Rs16.2 billion, or an EPS of Rs12.17, reflecting a 6% drop from the same period last year.
According to JS Global, Engro Fertilizer's net sales surged by 45% year-over-year and more than doubled quarter-over-quarter to Rs79.6 billion in 3Q2026. This increase was driven by a significant rise in Urea and DAP sales, with Urea sales climbing 21% year-over-year and nearly tripling quarter-over-quarter to 711,000 tons. DAP sales also saw substantial growth, increasing more than twofold year-over-year and by 2.1 times quarter-over-quarter to 37,000 tons. The company's net sales for the first nine months of 2026 rose by 11% year-over-year to Rs150.4 billion.
The company's gross margins improved to 35.0% in the third quarter of 2026, up from 32.6% in the same quarter the previous year, though slightly down from 35.8% in the second quarter of 2026. The year-over-year improvement was attributed to stable Urea and DAP prices and higher sales volumes. However, distribution expenses increased by 33% year-over-year and 81% quarter-over-quarter, reaching Rs7.1 billion in the third quarter, due to elevated fuel costs.
Engro Fertilizer's finance costs also rose significantly, by 90% year-over-year and 28% quarter-over-quarter, amounting to Rs2.4 billion in 3Q2026. The increase was primarily due to higher debt levels amid greater inventory and working capital requirements. The company reported a tax expense of Rs6.7 billion, with an effective tax rate of 42% for the quarter.
Additionally, the company declared a third interim cash dividend of Rs5.5 per share, with a payout ratio of 80%, which was lower than expectations. This brings the dividend payout for the first nine months of 2026 to Rs9.25 per share, compared to Rs11.00 per share in the same period of the previous year.
JS Global maintains a buy stance on Engro Fertilizer, with the stock trading at an estimated 2026 PE ratio of 8.4 times and a dividend yield of 11%.