Lahore: Millat Tractors Limited (MTL) announced its financial results for the first quarter of fiscal year 2026, revealing a notable decrease in earnings. The company reported an unconsolidated profit of Rs514 million, translating to an earnings per share (EPS) of Rs2.57. This marks a 17% decline compared to the same period last year and a 61% drop from the previous quarter.

Net sales for the company fell by 6% year-on-year and 38% quarter-on-quarter. The decline is attributed to reduced tractor sales, which dropped by 15% year-on-year and 46% quarter-on-quarter, with 2,177 units sold in the first quarter of fiscal year 2026, compared to 2,556 units in the same quarter last year and 4,062 units in the previous quarter.

The company's gross margins decreased by 188 basis points year-on-year but improved by 221 basis points quarter-on-quarter, reaching 27.21%. This is in contrast to 29.09% recorded in the same period last year and 25.00% in the previous quarter.

Distribution expenses decreased by 4% year-on-year, coinciding with a 46% quarter-on-quarter decline in volumetric sales. However, administrative expenses rose by 4% year-on-year and fell by 2% quarter-on-quarter, amounting to Rs406 million.

Other income experienced a significant decrease, falling by 69% year-on-year and 90% quarter-on-quarter, with a recorded figure of Rs32 million. This decline is largely due to the absence of gains from the sale of investment property, which contributed Rs145 million to the previous quarter's earnings.

Despite an increase in borrowings, the company's finance cost decreased by 25% year-on-year and 20% quarter-on-quarter, totaling Rs471 million. The finance cost reduction is expected to impact subsequent quarters as the borrowing facility was obtained towards the end of the quarter.

The effective tax rate for the company was reported at 35% for the first quarter of fiscal year 2026, compared to 36% in the same quarter last year and 30% in the previous quarter.

Market analysts maintain a "SELL" recommendation on Millat Tractors, with the company currently trading at a projected price-to-earnings ratio of 17.7 for fiscal year 2026 and 11.9 for fiscal year 2027.