Fauji Fertilizer’s Earnings Surpass Expectations with Boost in Other Income

Karachi: Fauji Fertilizer Company Ltd. (FFC) has reported a significant rise in its second-quarter earnings for the calendar year 2025, exceeding market expectations with a notable increase in other income. The company disclosed standalone earnings of PkR25.2 billion, translating to an earnings per share (EPS) of PkR17.69, marking a 62% year-on-year increase from PkR15.5 billion (EPS: PkR10.93) in the same period last year.

FFC’s revenue surged to PkR91.8 billion from PkR57.2 billion, representing a 61% year-on-year increase. This growth was primarily driven by a significant 4.9 times increase in DAP offtakes, following the integration of volumes from FFBL post-merger. However, the growth in revenue was partially offset by a 6% decline in urea offtakes.

Despite the revenue boost, gross margins contracted to 33.7%, down from 54.5% in the same period last year. This decline was attributed to a higher proportion of DAP sales and increased costs associated with granular urea.

Distribution expenses rose by 57% year-on-year to PkR8.7 billion, largely due to the higher DAP offtakes during the quarter. Meanwhile, other income saw a substantial 3.8 times increase year-on-year, reaching PkR20.7 billion, surpassing projections of PkR8.0 billion. This increase is likely attributed to higher-than-expected dividends from power subsidiaries and the offshore joint venture PMP.

Finance costs also increased by 24% year-on-year to PkR1.7 billion, primarily due to higher outstanding debt following the merger.

AKD Securities Limited has maintained a ‘BUY’ stance on FFC, with a target price of PkR597 per share by June 2026. The positive outlook is based on factors such as lower gas prices for FFC’s base plants, increasing DAP core margins, consistent dividend income from power and banking subsidiaries, and improvements in the food business through enhanced market penetration and cost efficiencies.