FFC expects positive urea market, sees higher DAP prices ahead

August 05, 2026 (MLN): Urea market is expected to remain positive, though high phosphoric acid costs are likely to push DAP prices higher, according to management at a corporate briefing session. The company also said it is not planning or considering any stock split at this time.

Consolidated 2QCY26 earnings came in at Rs22.4bn (EPS: Rs15.43) against Rs13.83 in 2QCY25, alongside a dividend of Rs14.5 per share.

Net profit for the first half of 2026 rose to Rs41.8bn from Rs38.5bn in the same period last year, up 9%, as revenue climbed 28% to Rs199.6bn from Rs155.4bn. Gross profit increased 19% to Rs63.7bn from Rs53.6bn, while other income remained flat at Rs28.2bn.

Profit from fertilizer operations formed 55% of net profit at Rs22.9bn, up from 48% (Rs18.4bn) a year earlier. Investment income contributed Rs5.3bn (13%) against Rs6.1bn (16%) last year, while dividend income stood at Rs13.6bn (32%) compared to Rs13.9bn (36%) in the corresponding period.

Dividend receipts included Rs12.5bn from power investments, Rs3.4bn from Askari Bank, and Rs3bn from PMP.

On the group level, consolidated revenue came in at Rs230bn against Rs182bn SPLY, with gross profit at Rs76bn versus Rs63bn.

Group net profit reached Rs42.4bn compared to Rs38bn last year, with FFC's own contribution at Rs26bn against Rs22bn, and subsidiaries and associates adding Rs16.4bn versus Rs16bn, led by Askari Bank at Rs5.6bn and the power segment at Rs7bn.

The company's urea market share increased to 56% from 48% SPLY as industry-wide urea sales grew 7% to 2,512 KT from 2,351 KT. FFC's (PSX: FFC) urea sales rose 25% to 1,404 KT, driven by Sona Urea (P) sales of 1,241 KT, up 26%, and Sona Urea (G) sales of 163 KT, up 17%. A planned turnaround at the Mirpur Mathelo plant is scheduled for September 2026.

In DAP, FFC's market share improved to 65% from 63% SPLY as industry sales expanded 7% to 485 KT from 455 KT. The company's DAP sales grew 11% to 318 KT, with Sona DAP sales at 276 KT, up 6%, and imported DAP sales at 42 KT, up 58%.

Sulphur prices have risen from $300 per ton to $1,200-1,300 per ton amid geopolitical disruptions, elevating phosphoric acid production costs, with the elevated levels expected to persist for the next three to four months.

The company is expanding its Sona Centre network into a one-stop platform for farmers and has launched six specialty crop nutrition products in collaboration with Yara International, with a projected sales contribution of $3mn during the remainder of CY26.

On the balance sheet, equity and reserves rose to Rs153.1bn as of June 2026 from Rs135.6bn in December 2025, while long-term borrowings increased to Rs85.8bn from Rs61.3bn. Stock in trade rose to Rs64.4bn from Rs38.2bn on higher DAP inventory.

Total investments stood at Rs284.2bn, including Rs174.4bn in short-term investments, against Rs260.5bn (short-term: Rs181.5bn) in December 2025.

The debt-to-equity ratio shifted to 32:68 from 27:73, while the current ratio eased to 1.08 times from 1.15 times.

The dividend payout for the period stood at approximately 86%, which is expected to realign with historical levels of around 75% going forward.

On the PIA acquisition, the first tranche of Rs30.6bn has been paid, with the second tranche to follow as planned; the consortium holds a 66.67% stake in PIA, with FFC's total committed investment at Rs63bn.

No accounting gain has been booked on the SIDC settlement, as no agreement has been reached with the Sindh government.

The FFBL plant remains operational with continued gas supply, while Agritech's plant remains shut down until August 15 due to RLNG shortages.

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