Karachi: Engro Holdings Limited, formerly known as Dawood Hercules Corporation Limited, has reported a notable downturn in profitability for the first quarter ending March 31, 2025. The company's standalone Profit-After-Tax (PAT) plummeted to PKR 47 million, a stark contrast to the PKR 346 million recorded in the same period last year. This translated into an Earnings Per Share (EPS) of PKR 0.04, down from PKR 0.72. The decline is attributed primarily to the transfer of income-generating investments to DH Partners Limited.
On a consolidated level, Engro Holdings saw a 30% decrease in revenue from continued operations, amounting to PKR 72,911 million compared to PKR 104,300 million in the previous year. The consolidated PAT from continued operations was PKR 3,417 million, with shareholders' attributable PAT at PKR 2,058 million, compared to PKR 7,778 million and PKR 2,023 million respectively, in the prior year. Including discontinued operations, the consolidated PAT stood at PKR 3,979 million, with shareholders' attributable PAT at PKR 1,766 million, down from PKR 7,708 million and PKR 1,952 million respectively. The EPS for this period was PKR 1.47, a decrease from PKR 4.05 in 2024.
According to information available from the Pakistan Stock Exchange (PSX), the major variance in consolidated EPS was primarily attributable to reduced profitability in the fertilizer business and lower financial income. This was partially mitigated by increased tower revenue, lower financing costs due to reduced interest rates, and efficiencies from cost optimization.
The company's fertilizer segment experienced a significant downturn, with revenues and profitability declining by 59% and 63%, respectively, due to lower urea and phosphate volumes. The polymer business also faced challenges, with profitability impacted by higher gas prices and elevated inventory levels despite increased volumes.
In telecom infrastructure, Engro's Enfrashare expanded to over 4,300 towers with a 1.28x tenancy ratio, reaffirming its market leadership. An amalgamation agreement with Pakistan Mobile Communications Limited is set to further bolster Engro's telecom infrastructure footprint, pending regulatory approvals.
The energy sector showed stable performance, with the Thar Power Plant dispatching a Net Electrical Output of 814 GWH. However, the company faced setbacks in its divestment of thermal assets, as Engro Energy Limited terminated Share Purchase Agreements with Liberty Power Holdings due to unmet conditions.
Despite these challenges, Engro Holdings continues to focus on strategic growth initiatives. The company is reassessing its dividend distribution strategy to support investments, including the arrangement with PMCL for 10,600+ towers. Consequently, no interim cash dividend is proposed for the year ending December 31, 2025.
Looking forward, Engro Holdings anticipates a modest economic revival in Pakistan, driven by easing inflation and stable political conditions. However, challenges remain in sectors like agriculture and construction. The company is also engaged in resolving issues related to multiple taxation of Inter Corporate Dividend to enhance shareholder returns.