Engro flags DAP shortage, seeks easing of import restrictions

Engro Fertilizers said it is holding limited stocks of diammonium phosphate (DAP) and is in talks with the government to ease import restrictions, as geopolitical tensions continue to disrupt supplies, according to an analyst briefing.

Company officials said DAP imports remain constrained under prevailing conditions, though discussions are ongoing to facilitate shipments to meet domestic demand.

The company reported that lower DAP offtake weighed on revenue, as it adopted a cautious sales strategy in response to elevated local prices. While gross margins remained relatively stable, overall profitability declined.

Pakistan generally imports around 45% or nearly 606,000 tons of its requirement per annum. The demand per year hovers around 1.3 million tons, industry officials said.

Management noted that last year’s earnings were hit by multiple cost pressures, including higher super tax charges, increased finance costs tied to elevated inventory levels, and additional freight expenses to manage surplus stock. Each of these factors reduced profits by roughly PKR 2 billion, the company said.

On pricing, Engro Fertilizers said urea discounts peaked at PKR 350 per bag during the fourth quarter of 2025 but have since been reduced to around PKR 150 per bag across segments as market conditions stabilized.

Updates on projects

The company also provided an update on its joint project with Mari Petroleum Company to enhance gas pressure. It said Phase 1, Scope 1 of the Pressure Enhancement Facility (PEF) has been completed, while work on Scope 2 is underway.

Phase 2 is now expected to be finalized by the fourth quarter of 2025, slightly behind the earlier third-quarter target.

Engro Fertilizers said the increase in long-term debt during the year was primarily due to financing needs for the PEF project.

The company highlighted growth in its direct-to-farmer sales initiative, Engro Markaz, which generated more than PKR 390 million in revenue and fertilizer sales exceeding 2,400 metric tons. Further expansion is planned.

On the broader industry, the company said gas supply has resumed at two previously affected plants, including those operated by Agritech Limited and Fauji Fertilizer Company at Port Qasim, while Fatima Fertilizer’s Sheikhupura plant remains offline.

An industry-wide capital expenditure project worth about $300 million to enhance gas pressure from the Mari field is progressing as planned, with further phases expected to be completed by late 2026.

Looking ahead, the company said overall urea production remains stable, supported by the resumption of operations at key plants. Inventory levels are close to 1 million tons, providing a buffer against potential disruptions in RLNG supply.

Improved farm economics could support fertilizer demand if the government follows through on wheat procurement at PKR 3,500 per maund, encouraging farmers to grow export-oriented crops such as rice and sugar.

However, Engro Fertilizers warned it may need to extend discounts further to maintain market share amid rising fertilizer prices and ongoing geopolitical uncertainty.