Urea sales surge reshapes fertilizer earnings in second quarter

Pakistan’s listed fertilizer companies are expected to report mixed earnings for the second quarter of calendar year 2026, with stronger urea sales during the Kharif sowing season supporting profitability for some producers, while weak DAP demand and lower other income weigh on others, according to Insight Securities.

The brokerage said industry urea offtake increased 18% from a year earlier and 42% from the previous quarter to 1.5 million tons during the second quarter, citing National Fertilizer Development Centre (NFDC) data. The increase was driven by seasonal Kharif demand and advance purchases by farmers ahead of anticipated price increases.

In contrast, DAP offtake fell 36% from a year earlier and 34% from the previous quarter to 194,000 tons as higher prices reduced demand, the report said.

Insight Securities expects Fauji Fertilizer Company (FFC), Engro Fertilizers (EFERT) and Fatima Fertilizer (FATIMA) to report earnings per share (EPS) of PKR16.4, PKR2.0 and PKR8.5, respectively, for the quarter. The brokerage also forecasts cash dividends of about PKR11.5, PKR2.0 and PKR3.5 per share.

FFC expected to post resilient earnings

Insight Securities expects FFC to report unconsolidated profit after tax of PKR23.5 billion, or EPS of PKR16.4, down about 6% from a year earlier because of lower other income but up about 35% from the previous quarter on stronger fertilizer sales.

The brokerage said FFC’s urea offtake increased 37% from a year earlier and 33% from the previous quarter to 803,000 tons, while DAP sales declined 32% and 25%, respectively, because of higher prices.

Revenue is projected at PKR104.6 billion, up from PKR91.8 billion a year earlier, supported by stronger sales volumes and improved product prices. Gross margin is expected to expand by about 600 basis points from a year earlier, mainly because of healthier DAP margins.

Finance costs are forecast to rise 34% from a year earlier because of higher debt levels, while other income is expected to decline about 60% due to lower dividend income.

Engro Fertilizers' profit expected to fall

Insight Securities forecasts EFERT’s consolidated profit after tax at PKR2.6 billion, or PKR2.0 per share, down 53% from a year earlier and 20% from the previous quarter.

The brokerage attributed the weaker performance to lower fertilizer sales. Urea offtake fell to 258,000 tons from 431,000 tons a year earlier, while DAP sales dropped 69% from a year earlier and 57% from the previous quarter.

Revenue is expected to decline to PKR31.3 billion from PKR50.4 billion in the same period last year. Gross margin is projected at about 30%, while finance costs are expected to ease to PKR1.3 billion because of lower debt.

Fatima Fertilizer expected to lead earnings growth

Fatima Fertilizer is expected to deliver the strongest performance among the major producers, with consolidated profit after tax projected at PKR17.9 billion, or PKR8.5 per share, more than doubling from PKR8.6 billion a year earlier.

Insight Securities said the improvement will be driven by strong sales volumes, with urea offtake rising about 85% from a year earlier to 327,000 tons. CAN sales are also expected to increase about 27%, while NP fertilizer sales are forecast to decline about 6%.

Revenue is estimated at PKR90.2 billion, up from PKR63.9 billion in the corresponding quarter last year. Gross margin is expected to improve by about 14 percentage points because of stronger sales volumes and higher NP prices.

The brokerage said selling and distribution expenses are likely to more than double because of increased sales activity, while finance costs are expected to decline about 27% due to lower debt levels.

Insight Securities expects Fatima Fertilizer to announce a cash dividend of PKR3.5 per share alongside its quarterly results.