Karachi: Fauji Fertilizer Company Ltd. (FFC) announced its financial results for the first half of the calendar year 2025, showcasing a significant increase in earnings despite a decline in urea sales. The company revealed a profit of PkR38.5 billion, up from PkR26.1 billion in the same period last year, largely driven by a 79% year-over-year surge in other income.
The fertilizer segment contributed PkR18.2 billion to the company’s profitability, while dividend and portfolio income amounted to PkR20.3 billion. Notably, FFC received dividends of PkR9.0 billion from energy companies, PkR7.0 billion from PMP, and PkR3.0 billion from AKBL.
Despite the financial gains, the industry faced challenges with nutrient offtake, leading to a 23% drop in urea sales year-over-year due to tough farm economics. Consequently, the industry’s urea inventory levels rose sharply to 1,310k tons by the end of June 2025.
FFC’s own urea sales decreased by 25% year-over-year to 1,123k tons, resulting in a market share adjustment to 48% from 52% in the same period last year. Furthermore, the company holds 26% of the total industry inventory, equivalent to 338k tons.
The company’s DAP sales also declined by 29% year-over-year to 288k tons, with market share slipping to 64% from 71% previously. Management is hopeful for a rebound in nutrient demand in upcoming seasons, supported by increased Kisan Card financing.
While the Port Qasim plant is reportedly not facing gas curtailment issues and anticipates higher production, the DAP market is expected to see a slight downturn compared to last year. Meanwhile, phos-acid prices have risen to US$1,250/ton due to increased utilization in EV batteries.
The current price gap between international and local urea prices is PkR4,737 per bag, with the company offering minimal price discounts by the end of the second quarter. FFC is also actively pursuing Shariah-compliant status, aiming to achieve it by year-end, and AKBL plans to convert 30% of its branches to Islamic banking by the end of the current year, with full transition by 2027.
To enhance fertilizer availability, FFC has established 100 Sona centers and registered approximately 98,000 farmers. The company is also undergoing due diligence for a potential acquisition of PIA.
AKD Securities Limited maintains a ‘BUY’ stance on FFC, with a target price of PkR597 per share by June 2026, driven by factors such as lower gas prices, increasing DAP margins, consistent dividend income, and improvements in the food business.