MTL hands out Rs20 dividend, despite 19% profit drop

February 17, 2026 (MLN): Millat Tractors Limited (PSX:MTL) reported a net profit of Rs2.92bn for the half year ended December 31, 2025, which represent a 19.9% decline from the Rs3.65bn profit recorded in the same period last year.

The company's earnings per share decreased to Rs14.63 from Rs18.27 in the corresponding period of the previous year, however dividend was declared at Rs20 per share.

The tractor manufacturer's revenue from contracts with customers increased 3.4% YoY to Rs28.44bn from Rs27.49bn, demonstrating modest top-line growth.

Cost of sales declined 5.7% to Rs19.05bn from Rs20.20bn, resulting in a gross profit of Rs9.38bn, up 28.6% from Rs7.30bn in the prior period.

The gross profit margin improved significantly to 33% from 26.5% in H1 FY2025, indicating enhanced operational efficiency, better product mix, and improved cost management.

The net profit margin however declined to 10.3% from 13.3% in the same period last year, reflecting the heavy impact of a substantially higher tax burden on the bottom line.

Total operating expenses rose modestly by 0.4% to Rs2.45bn from Rs2.44bn, demonstrating disciplined cost control.

Distribution and marketing expenses increased 16.2% to Rs1.07bn from Rs919.6m.

Administrative expenses declined 2% to Rs844.1m from Rs860.9m, while other operating expenses decreased 18.5% to Rs536.1m from Rs657.9m, contributing positively to operational efficiency.

Other income dropped sharply by 67.9% to Rs85.4m from Rs266.4m, as the prior period had benefited from significantly higher non-operating income.

Operating profit surged 37% to Rs7.02bn from Rs5.12bn in H1 FY2025, reflecting the strong improvement in gross margins and controlled operating expenses.

Finance costs declined 25.7% to Rs871.7m from Rs1.17bn, providing meaningful relief as borrowing costs moderated in the lower interest rate environment.

Profit before income tax stood at Rs6.15bn, representing a 55.9% increase from Rs3.94bn in H1 FY2025.

The company recorded a taxation expense of Rs3.23bn, up 9.8 times from Rs298.3m in the corresponding period last year.

This dramatic surge in the tax charge emerged as the decisive factor behind the 19.9% decline in net profit, effectively wiping out the strong operational gains achieved during the period.

Millat Tractors Limited is Pakistan's leading tractor manufacturer, producing tractors under the Millat brand for the agricultural sector and playing a critical role in mechanising farming across the country.

The company's operational performance was impressive, with gross margins expanding sharply and operating profit surging 37%, reflecting strong execution and cost discipline.

However, the near tenfold increase in income tax expense significantly eroded the bottom line, emphasizing the impact of the revised tax regime on the company's profitability. 

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