Engro Fertilizers Limited expects its urea market share to recover toward historical levels as seasonal agricultural demand strengthens and nationwide annual urea consumption of 6.5 to 6.6 million tonnes absorbs existing industry inventories.

During its Q2 2026 corporate briefing, the company said there has been no fundamental change in its dividend policy, despite a temporary decline in earnings, adding that future dividend payouts will continue to be determined by the Board of Directors.

Management noted that domestic farming economics are expected to remain supportive in the coming crop cycles, backed by favorable grain prices and institutional credit, although higher global input costs and elevated retail prices continue to pressure farm budgets.

The company also shared an update on its Pressure Enhancement Facility (PEF) project, stating that Phase 1 is expected to be completed in Q3 2026, while Phase 2 is targeted for completion in Q1 2027.

For the second quarter of 2026, EFERT reported a 32% year-on-year decline in net profit to Rs3.8 billion, with earnings per share (EPS) of Rs2.85. Net revenue for the quarter fell 34% to Rs33.1 billion.

During the first half of 2026, net profit declined to Rs7.1 billion (EPS: Rs5.33), while cumulative revenue decreased 12% to Rs70.9 billion.

The Board declared an interim cash dividend of Rs1.75 per share for Q2 2026, taking the total dividend payout for the first half of the year to Rs3.75 per share.

Management attributed the decline in revenue primarily to a temporary reduction in urea market share, which fell to 17% in Q2 2026 from 34% a year earlier, as the company adopted planned pricing measures to protect profitability against a relatively higher gas cost structure.

Despite lower sales volumes, with urea sales declining by 154,000 tonnes during the first half, EFERT maintained a gross profit margin of 33%. Earnings also received support from a one-off remeasurement gain on SIDC provisions, which partially offset lower other income.

Looking ahead, the company said it enters the second half of the year holding 74% of Pakistan's total urea inventory, positioning it to meet peak demand during the upcoming Kharif and Rabi application seasons.

EFERT also noted that its debt-to-capital ratio increased to 56%, reflecting higher working capital requirements.