KARACHI: Millat Tractors Ltd., the Pakistani exporter of the US-based AGCO Corporation’s Massey Ferguson brand, and other manufacturers are expected to report much lower profits in the upcoming months because of the recent floods, which analysts say are bound to negatively impact many agricultural companies listed on the stock exchange.
Pakistan is currently reeling from monsoon rains and floods, which have killed more than 1,000 people, swept away 16,000 animals and submerged standing crops on hundreds of thousands of acres of farmland in the country. The government’s initial estimates put the damages at $1.31 billion (Rs370 billion).
While the Pakistan Stock Exchange (PSX) has broken its own records in recent months and risen 24 percent to 158,443 points so far this year since July 1, financial analysts say auto, cement, fertilizer, seeds, agrichemicals, dairy and banks with large agricultural loan portfolios are some of the listed sectors that may take a hit in the days ahead due to the floods.
“Floods affect companies like Millat Tractors and Al Ghazi Tractors due to farm income,” Shankar Talreja, head of research at the Karachi-based Topline Securities brokerage firm, told Arab News.
“We are expecting much lower profit as tractor sales have fallen.”
The devastation has eroded farm incomes as well as purchasing power of agriculturists who bought 2,981 tractors from July till September, 43 percent less than 5,206 units they purchased last year, according to the Pakistan Automotive Manufacturers Association (PAMA) data.
“We are expecting damage of 10-15 percent on rice and cotton crop due to their harvesting season which will hurt the overall farmers’ income,” Talreja said.
While Millat Tractors Ltd.’s sales contracted 15 percent to 2,177 units during this period, its competitor, Al-Ghazi Tractors Ltd., braved an even steeper 70 percent slump in its quarterly sales that dropped to 804 units only, compared with 2,640 units sold in the same period a year earlier.
The floods’ impact would be seen in the earnings for the quarter that ended in September. The companies are expected to start announcing their financials for the third quarter this month.
In its latest annual report, Millat Tractors Ltd. said Pakistan was experiencing unpredictable weather patterns, leading to occurrences such as cloud bursts, flash floods, severe droughts, glacial lake outbursts, intense heatwaves and erratic rainfall.
“Our company is also directly linked with agriculture and any adverse impact severely affects company’s performance as well,” said Millat Tractors Ltd., which delivered the highest ever export sales of more than 2,607 units in the outgoing fiscal year that ended in June.
Separately, Al Ghazi Tractors said they were also expanding sales through banking channels and exports to offset subdued domestic demand.
“Risks persist from potential seasonal flooding in critical regions for the company’s sales, which could disrupt agriculture and supply chains,” it said in its 2025 annual report.
The agriculture sector contributes 24 percent to Pakistan’s $407 billion gross domestic product (GDP) and has been worst affected by the floods.
The World Bank has projected Pakistan’s economy to grow by 2.6 percent in the ongoing fiscal year (FY2026), lowering its earlier estimate of 3.1 percent.
The International Monetary Fund (IMF) projects Pakistan’s GDP to increase by 3.6 percent as it reviews the government’s performance under a $7 billion loan program, keeping an eye on flood damages that analysts say may reflect on corporate profitability at the stock market.
Muhammad Saad Ali, head of research at Lucky Investments Ltd., said auto assemblers like Indus Motor Company (IMC), Toyota’s Pakistan unit, was likely to take a hit, given the company’s 50 percent sales come from the flood-hit rural areas.
The company’s car sales surged 56 percent last year to 33,757 units, backed by an 84 percent hike in the sales of its passenger cars and 32 percent growth in commercial vehicle segment, it said in a latest report.
“The company is well-positioned to navigate future challenges and emerge even stronger,” the IMC report said.
Ali cited fertilizer, automaker, seed, dairy and agrichemical firms, when asked to name the listed sectors that are expected to get impacted by floods.
“[Earning] results are yet to show the impact,” he said.
While the fertilizer sales have not yet shown a major impact, the sales of cement could take a hit, according to the analyst.
Sana Tawfik, head of research at Arif Habib Ltd., recalled that in 2011 and 2022 floods the following quarter had seen as much as 20 percent decline in fertilizer sales.
“This is mainly due to weaker farm economics as the destruction of crops lessens the farmers’ ability to fund subsequent crop cycles and purchase fertilizer for them,” she told Arab News, adding that banks with large agricultural loan portfolios would have to grapple with the consequences of the recent floods.
