EFERT eyes gradual demand pickup for kharif season, projects lower urea sales in 2025

Engro Fertilizers (EFERT) held an analyst briefing today, reviewing its first-quarter results for 2025 (1QCY25) and outlining its future outlook.

The company started the year on stable footing, navigating market uncertainties while delivering a PKR 2.25 per share interim dividend to shareholders.

Despite softer demand and pricing pressures, EFERT emphasized its operational resilience. Its plants operated efficiently, and the company strengthened its market position, holding 51% of the total urea inventory as of March-end—an increase from 34% last year.

Quarterly revenue declined to PKR 24.3 billion, sharply down from PKR 53.8 billion in the same period last year, impacted by lower urea offtake and a global decline in DAP prices. Net profit stood at PKR 3.9 billion (EPS: PKR 2.94), compared to PKR 5.7 billion (EPS: PKR 5.81) in the previous year.

Urea sales dropped to 260,000 tons from 548,000 tons, reducing market share from 30% to 24%. DAP sales also plummeted 71% YoY to 24,000 tons, bringing market share down to 18%.

Industry-wide demand remained weak, driven by poor farm economics, lower crop prices, rising input costs, and water shortages. Total industry urea and DAP volumes contracted 40% and 52% YoY, respectively.

EFERT flagged continued pressure from unregulated undercutting, with the local-to-imported urea price gap widening to PKR 3,271 per bag. The company is offering selective discounts, with future pricing dependent on market dynamics and demand.

Looking ahead, management is cautiously optimistic about the Kharif season. They anticipate a gradual recovery in fertilizer demand, though full-year urea sales are projected to be lower than CY24, likely ranging between 6.2 and 6.5 million tons.

Management also provided updates on the Pressure Enhancement Facility (PEF) project, jointly undertaken with FFC and FATIMA. Phase 1 is complete, with the remaining work expected to conclude by quarter-end.