Fauji Fertilizer posts lower-than-expected Q4 profit

Fauji Fertilizer Company Ltd. on Thursday reported a smaller-than-expected profit for the fourth quarter of 2025, as weaker gross margins and a higher tax rate offset gains from other income.

The fertilizer maker posted unconsolidated net profit after tax of PKR 15.9 billion ($57 million), or earnings of PKR 11.19 per share, for the quarter ended December. Profit rose 12% from a year earlier but fell 17% from the previous quarter.

Analysts said the results missed expectations, largely due to softer margins and a higher effective tax rate. Gross margins fell to about 25% in the quarter, down from more than 30% in the third quarter, while the effective tax rate rose to 47%.

Net sales totaled PKR 149.7 billion, flat from a year earlier but up 18% quarter-on-quarter, driven by higher urea volumes. Urea sales rose 11% from a year earlier, partly offset by heavier discounts and a 23% decline in diammonium phosphate (DAP) sales.

Margins were pressured by a higher contribution from the lower-margin DAP segment and rising input costs, including a 7% quarter-on-quarter increase in phosphoric acid prices. International DAP margins also weakened sharply during the period, analysts noted.

Other income rose 67% from a year earlier to PKR 5.4 billion, though it declined 14% from the previous quarter. The company’s cash balance increased to PKR 190 billion, while net cash stood at PKR 110 billion, slightly lower than in September.

Distribution expenses fell 14% year-on-year to PKR 8.9 billion, though they rose 4% from the prior quarter. Finance costs remained largely unchanged at about PKR 1.5 billion, even as the company increased long-term borrowings to PKR 50 billion to fund capital expenditures, including Phase II of the Production Enhancement Facility at the Mari gas field.

For the full year 2025, Fauji Fertilizer reported net profit of PKR 73.6 billion, or PKR 51.69 per share, up 14% from the previous year. Annual net sales rose 16% to PKR 432 billion.

The company also declared a cash dividend of PKR 8.50 per share for the quarter, bringing total dividends for 2025 to PKR 37 per share, lower than market expectations.

Analysts said earnings were weighed down primarily by weaker margins in the DAP segment and higher taxes, though they remain optimistic about the company’s longer-term earnings and dividend outlook.