FFC doubles down on fertilizer sales recovery despite agri slowdown

Despite a challenging year for Pakistan’s agriculture sector, Fauji Fertilizer Co. (FFC) is holding firm on its outlook, betting on a market rebound in the second half of 2025—even as declining farm incomes continue to dampen fertilizer demand.

In its analyst briefing Tuesday, FFC acknowledged a sharp erosion in farmer profitability, especially for cotton, sugarcane and rice.

The culprit: soaring input costs. “Fuel, seeds, utilities—everything’s become significantly more expensive,” officials said, citing inflationary pressure on essential inputs.

To recall, the company’s consolidated urea sales, including Fauji Fertilizer Bin Qasim (FFBL), reached 538,000 metric tons in the first quarter of 2025, marking a 26% decline—less severe than the industry-wide 40% drop compared with same quarter last year.

This relative resilience helped the company boost its urea market share to 49%, up from 45% last year.

In DAP, FFC remained the market leader, clocking 88,000 metric tons in sales and holding a 63% market share despite muted buying activity.

No Discounts, No Panic: FFC Banks on Urea Revival Despite Farmer Woes

FFC expects the urea market to end calendar year 2025 with an inventory buffer of 400,000 to 500,000 metric tons—what it calls a “safety stock” for national needs.

As of April 2025, urea inventories stood at approximately 1.16 million metric tons, up from 820,000 tons in March. This marks the highest inventory level in nearly eight years.

Company-wise, Engro Fertilizers Ltd. has the highest inventory at 545,000 tons, followed by FFC with 291,000 tons and Fatima Group with 278,000 tons.

Despite the slowdown, the company has no plans for exports or price discounts. Instead, it is leaning on its robust dealer network and maintaining the lowest inventory levels in the industry. Urea sales are projected to surpass 6 million metric tons in 2025, compared to 6.4 million tons sold last year.

FFC Signals Confidence with Power Dividend Return, Shariah Tag in Sight

A bright spot for shareholders: FFC expects to resume dividend flows from FFBL Power Co. Ltd. in the second half of 2025, now that the subsidiary is debt-free. Additionally, FFC plans to achieve Shariah compliance within a few months, expanding its appeal to ethical investors.

$60M capex for long-term sustainability

The company is advancing a $60 million pressure enhancement facility at the Mari Field. Phase I, which includes pipeline infrastructure, is on track for completion in the first half of 2025. Phase II, which involves installing compressors, is expected to be completed by mid-2026. Officials said compressor delivery is expected by July or August.

“These are critical investments for the business’s long-term sustainability,” they added.

Gas pricing and GIDC: no surprises

FFC’s gas supply agreement with Mari Petroleum remains valid through 2029, with prices fixed by the government at Rs580 per MMBtu. The pricing differential with Engro Fertilizers is expected to persist. Meanwhile, the Gas Infrastructure Development Cess (GIDC) case remains pending in the Supreme Court.

Agritech restructuring underway

Following a shareholding consolidation by FFC, Fauji Fertilizer Bin Qasim Ltd. and Askari Bank—now jointly holding 51%—reforms at Agritech are underway with a new board in place. FFC aims to steer the company toward greater operational efficiency.

Strong Q1 results

FFC reported a 25% year-over-year increase in profit for the quarter ended March 31, posting net earnings of Rs13.3 billion, up from Rs10.5 billion in the same period last year. Earnings per share rose to Rs9.33 from Rs8.27.