Karachi: Fatima Fertilizer Company Ltd. (FATIMA) released its financial results for the first quarter of 2025, demonstrating steady profitability despite facing challenges from reduced revenue and margin pressures. The company reported consolidated earnings of PkR8.4 billion, translating to an earnings per share (EPS) of PkR3.99, maintaining flat year-over-year performance.
Revenue for the quarter saw a significant decline of 21% compared to the same period last year, dropping to PkR52.0 billion from PkR66.0 billion. This decline was primarily attributed to lower offtakes, with sales of Urea, Calcium Ammonium Nitrate (CAN), and Nitrophosphate (NP) decreasing by 10%, 21%, and 23% respectively.
Despite the drop in revenue, gross margins experienced a slight contraction, moving to 40.4% from 41.5% in the same quarter last year. The contraction was largely due to a lower proportion of sales from the base plant, which benefits from more favorable gas pricing.
On a positive note, other expenses were significantly reduced by 82% year-over-year, totaling PkR1.1 billion. This reduction was largely due to the absence of one-off brand impairment charges that were booked in the previous year.
Conversely, the finance cost rose sharply, increasing by 2.3 times to PkR1.9 billion, primarily due to a substantial increase in total borrowings, although this was partly offset by declining financing rates. Additionally, the effective tax rate for the quarter stood at 39%, a decrease from 49% in the same quarter last year.
Fatima Fertilizer’s other income was reported at PkR2.2 billion, down by 4% from the previous year. This decrease was attributed to the impact of declining yields, which outweighed a 2.2 times year-over-year increase in cash and short-term investments.
AKD Securities Limited maintains a ‘BUY’ rating on FATIMA, with a target price of PkR103 per share for December 2025. The positive outlook is based on anticipated recovery in future offtakes due to higher carryover inventory, lower gas prices benefiting base plant margins, and improved liquidity expected to sustain healthy payouts.