Karachi: Engro Fertilizers Limited (EFERT) announced its financial results for the second quarter of 2026, revealing a 32% year-on-year decline in earnings per share to Rs2.85, although the earnings exceeded industry expectations. The company's net profit for the quarter stood at Rs3.8 billion, marking a 14% increase from the previous quarter, but a notable decrease compared to the same period last year. For the first half of 2026, EFERT reported earnings of Rs7.1 billion, down 16% from the previous year.

According to JS Global, the quarterly results were buoyed by a one-off gain of Rs1.8 billion related to discounting income from the Sindh Infrastructure Development Cess, which helped surpass market expectations. However, the company faced challenges with a 34% year-on-year and 13% quarter-on-quarter decline in net sales, amounting to Rs33.1 billion. The drop was attributed to reduced sales of urea and DAP, which fell by 41% and 68% year-on-year, respectively.

Despite the decline in sales, EFERT reported a gross margin of 35.8%, the highest in ten quarters, as opposed to 31.4% in the previous year and 31.0% in the first quarter of 2026. This improvement followed an increase in urea prices by Rs100 per bag in April 2026. Other income was recorded at Rs413 million, indicating a significant year-on-year decrease of 68%, while distribution and finance costs saw increases of 15% and 6%, respectively.

The company's tax expenses amounted to Rs2.8 billion, with an effective tax rate of 42%, compared to Rs3.7 billion and a 40% rate the previous year. EFERT declared a second interim cash dividend of Rs1.75 per share, contributing to a first-half payout of Rs3.75 per share, a decrease from Rs6.50 per share in the first half of 2025. Despite the mixed financial performance, a "Buy" stance on EFERT is maintained.