Fauji Fertilizer Q4 earnings come in below industry expectations

KARACHI: Fauji Fertilizer Company Limited (FFC) on Thursday announced its financial results for the fourth quarter of 2025, reporting earnings that came in below industry expectations due to weaker-than-anticipated gross margins.

The company posted an unconsolidated quarterly profit of Rs15.9 billion, translating into earnings per share (EPS) of Rs11.20. While profits rose 12% year-on-year, they declined 17 percent quarter-on-quarter. For the full year 2025, FFC reported earnings of Rs73.5 billion (EPS: Rs51.69), reflecting a 14 percent YoY increase.The weaker quarterly performance was primarily driven by margin compression. Gross margins stood at 25.2 percent in 4Q2025, down from 25.9 percent in 4Q2024 and 30.8 percent in 3Q2025, falling short of market expectations. According to industry channel checks, the decline is largely attributable to an impairment charge of Rs8–9 billion booked against sales tax receivables.

Other income declined to Rs5.4 billion in the quarter, down 21 percent YoY and 14 percent QoQ, mainly due to the absence of dividend income from energy businesses. On a cumulative basis, however, other income increased 13 percent YoY to Rs39.8 billion in 2025.

Net sales rose 18 percent QoQ to Rs149.7 billion in 4Q2025, while remaining flat on a YoY basis, supported by higher offtakes as urea sales reached an all-time monthly high in December. For the full year, sales climbed 16 percent YoY to Rs432 billion.

Distribution expenses declined 14% YoY but increased 4 percent QoQ to Rs8.9 billion during the quarter. Finance costs remained stable at Rs1.6 billion, bringing total finance costs for 2025 to Rs6.5 billion.

Tax expense for the quarter amounted to Rs13.8 billion, implying an effective tax rate of 47 percent, compared with Rs13.5 billion and a 49 percent effective tax rate in the corresponding period last year.

Alongside the results, FFC announced an annual cash dividend of Rs8.50 per share, below market expectations. This brings the total cash dividend for 2025 to Rs37 per share, representing a payout ratio of 72 percent, compared with 80 percent in 2024.