Engro Fertilizers Posts Significant Profit Growth Amid Rising Sales and Margins

Karachi: Engro Fertilizers Limited (EFERT) has reported a substantial increase in profitability for the second quarter of the calendar year 2025, driven by robust sales and improved margins. The company announced consolidated earnings of PKR 5.6 billion, equivalent to earnings per share of PKR 4.17, marking a 3.3-fold increase from the previous year’s figure of PKR 1.7 billion (EPS: PKR 1.25).

Despite the impressive growth, the results fell slightly below analysts’ expectations due to lower-than-anticipated retention prices, which were impacted by higher discounts. In conjunction with the earnings report, EFERT declared a cash dividend of PKR 4.25 per share, bringing the total dividend for the first half of the calendar year 2025 to PKR 6.5 per share.

The company’s revenue experienced a 28% year-on-year increase, reaching PKR 50.4 billion. This growth was fueled by significant upticks in urea and DAP offtakes, which rose by 40% and 31% year-on-year, respectively. The company’s gross margins improved to 31.4% from 20.5% during the same period last year, largely due to higher sales volumes and the absence of elevated repair and maintenance costs that were incurred during the turnaround of the EnVen plant last year.

Operating expenses climbed by 18% year-on-year to PKR 5.2 billion, a rise attributed to the increased offtakes. Additionally, other income surged by 73% year-on-year to PKR 1.3 billion, up from PKR 0.7 billion the previous year. The company has indicated that further details on this increase will be provided in due course.

EFERT’s finance costs rose by 44% year-on-year to PKR 1.8 billion, a result of a 1.6-fold increase in borrowings. The increased borrowing was necessitated by higher working capital requirements amid rising inventory levels and capital expenditures related to the Pressure Enhancement Facility.

AKD Securities Limited has expressed a positive outlook on EFERT, maintaining a ‘BUY’ stance with a target price of PKR 252 per share by June 2026. The firm anticipates a recovery in offtakes due to lower channel inventory and sustained high dividend payouts, with an estimated dividend yield of 10.5% for the calendar year 2025.