Fertilizer profits set to surge 20% as volumes and margins rebound

July 17, 2025 (MLN): Pakistan’s Fertilizer sector is on track to deliver robust earnings rebound in 2QCY25, with aggregate profits projected at Rs34.5 billion, marking a 20% jump from Rs28.7bn in the same quarter last year.

This performance boost is underpinned by an 11% YoY increase in revenues, as both urea and DAP offtakes rose by 3% and 6%, respectively according to the earning preview by Adam Securities Limited.

The gross margins are set to rise to 35.4% from 34.7%, aided by Engro Fertilizer’s (PSX:EFERT) recovery from last year’s plant shutdown.

On the expense side, finance costs are likely to climb 16% YoY amid higher borrowing levels, while other income may decline by 19% YoY, reflecting the impact of lower interest rates and a scaled-down investment base.

FFC

Fauji Fertilizer Company (PSX:FFC) is forecasted to post an unconsolidated PAT of Rs18.2bn (EPS: Rs12.8/share), reflecting a 16% YoY drop.

This decline is mainly attributed to a 14% fall in revenue, as urea sales volume moderated during the quarter.

It’s worth noting that in 2QCY24, EFERT’s plant shutdown allowed FFC to temporarily boost its urea market share to 64%, up from 48% a year earlier.

Gross margins are expected at 35%, down from 40% in SPLY, while the company is likely to declare a Rs9.50/share interim cash dividend.

FATIMA

Fatima Fertilizer (PSX:FATIMA) is expected to deliver a stellar 105% YoY increase in consolidated earnings, with PAT projected at Rs10.6bn (EPS: Rs5.07/share).

The sharp earnings boost is driven by a 59% YoY revenue surge, supported by a 57% increase in volumetric sales.

The company’s gross margin is seen at 40.2%, improving from 38.2% last year. An interim dividend of Rs4/share is also expected.

EFERT

EFERT is poised for a solid comeback, with consolidated PAT estimated at Rs5.6bn (EPS: Rs4.23/share) a 2.3x YoY jump.

The turnaround reflects a strong recovery from last year’s low base caused by maintenance shutdowns.

Revenue is projected to climb 28% YoY, while gross margins are expected at 30%. The company is likely to accompany its earnings announcement with a Rs4/share cash dividend.

Fertilizer sector accounts

  Source: Accounts, ASL Research

Earning per share of fertilizer sector

  Source: Accounts, ASL Research, *Unconsolidated

Urea & DAP offtakes

  Source: NFDC

EFERT demonstrated strong operational momentum in the second quarter of CY25 with a YoY increase of 39% and an impressive 72% rise QoQ.

Despite this quarterly performance, the company reported a 27% decline in total offtakes for 1HCY25 compared to the same period last year, highlighting a slower start to the year.

FATIMA posted remarkable growth during 2QCY25, with offtakes soaring 117% YoY.

Although volumes dipped slightly by 14% QoQ, its cumulative performance for the first half of CY25 reflected a healthy 12% YoY increase underscoring resilient market demand and efficient distribution.

In contrast, FFC saw a 19% YoY drop in 2QCY25, despite a modest 25% improvement from the prior quarter.

The company’s half-year offtake plunged 29% YoY, pointing to ongoing challenges in sustaining last year's performance levels.

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