Fauji Fertilizer’s Earnings Surge 26% Amid Robust DAP Sales

Islamabad: Fauji Fertilizer Company Ltd (FFC) has reported a 26% increase in earnings for the first quarter of Calendar Year 2025, reaching PkR13.3 billion, or PkR9.33 per share. This is a notable rise from PkR10.5 billion, or PkR7.39 per share, in the same period last year. Despite the positive earnings report, the results fell short of expectations due to lower-than-anticipated other income. In a concurrent announcement, FFC declared an interim cash dividend of PkR7.0 per share.

The company’s revenue rose to PkR63.6 billion, up 9% year-over-year from PkR58.4 billion. This increase was largely driven by a fivefold surge in DAP offtakes, attributed to the incorporation of volumes from FFBL following their merger. However, the rise in revenue was partially offset by a 19% decline in urea offtakes.

FFC’s gross margins improved significantly, reaching 35.6%, compared to 29.6% in the same period last year. The previous year’s margins were adversely affected by the procurement of high-cost imported urea from the government.

Distribution expenses saw a 17% increase year-over-year, amounting to PkR6.1 billion, as a result of the higher DAP offtakes during the quarter.

The company’s other income experienced a decline of 28% year-over-year, dropping to PkR7.4 billion from PkR10.3 billion. This decrease was mainly due to the absence of dividend income from power associates, FWE I and II, and reduced yields on short-term investments.

The finance cost rose by 13% year-over-year to PkR1.7 billion, primarily driven by higher outstanding debt following the merger.

AKD Securities Limited has maintained a ‘BUY’ stance on FFC, with a target price of PkR583 per share by December 2025. This represents a potential upside of 63%, along with a projected dividend yield of 12% over the same period. The outlook is bolstered by the synergies expected from the merger with FFBL and the continuation of elevated gross margins due to the availability of cheaper gas for FFC’s base plants.