Engro Fertilizers’ Profitability Dips Amid Decline in Phosphate Sales

Karachi: Engro Fertilizers Ltd. (EFERT) reported a notable decline in its profitability for the third quarter of the calendar year 2025, attributing the downturn to a significant drop in phosphate sales. The company announced consolidated earnings of PKR 5.8 billion, or PKR 4.35 per share, marking a 32 percent decrease from the PKR 8.6 billion, or PKR 6.41 per share, reported in the same period last year. The results fell slightly below market expectations, primarily due to higher-than-anticipated costs of goods sold.

Alongside the financial results, EFERT declared a cash payout of PKR 4.5 per share, bringing the total dividend for the first nine months of 2025 to PKR 11.0 per share. The company’s revenue saw a year-on-year decrease of 7 percent to PKR 54.8 billion, largely due to an 81 percent decline in diammonium phosphate (DAP) offtakes and discount offerings on urea.

Urea and DAP offtakes were recorded at 589,000 tons and 14,000 tons, respectively, reflecting a 26 percent increase in urea and an 81 percent decrease in DAP compared to the previous year. Gross margins contracted to 32.6 percent from 34.9 percent, primarily due to increased repair and maintenance expenses linked to base plant maintenance during the quarter’s final month.

Operating expenses rose by 33 percent to PKR 6.6 billion, driven by higher urea offtakes. Meanwhile, other income increased by 40 percent to PKR 534 million, attributed to higher cash and short-term investments, which offset lower yields. The company’s finance cost decreased slightly by 1 percent to PKR 1.3 billion, as higher borrowings were largely countered by a fall in interest rates.

Despite the challenges, AKD Securities Limited maintains a ‘BUY’ recommendation on EFERT, with a target price of PKR 252 per share by June 2026. The positive outlook is supported by an anticipated recovery in offtakes, a reduction in channel inventory, and continued high payouts.