Engro Fertilizers Limited (EFERT) reported a substantial 63% decrease in its profit after tax (PAT) for the first quarter ending March 31, 2025, totaling Rs2.90 billion compared to Rs7.76 billion in the same period last year. This downturn was disclosed in the company’s consolidated financial results submitted to the Pakistan Stock Exchange (PSX) on Tuesday.
Since the announcement of these results, the company’s stock price has dropped by more than 2% as of 1:29 pm.
The company’s earnings per share (EPS) fell to Rs2.17 from Rs5.81 year-on-year. Despite the decline, EFERT announced a cash dividend of Rs2.25 per share for the first quarter of the calendar year 2025.
Net sales experienced a sharp 58% drop, amounting to Rs30.29 billion, down from Rs73.78 billion in the corresponding quarter of the previous year. The cost of sales also decreased by 65% to Rs19.60 billion from Rs56.59 billion, resulting in a gross profit of Rs10.68 billion, compared to Rs17.20 billion last year.
Farmers faced tough conditions during the quarter due to lower wheat prices, higher input costs, and adverse weather events like a winter drought and water shortages, leading to an overall shrinkage in the urea and DAP markets by 40% and 52% YoY, respectively. EFERT’s own urea sales dropped 53% YoY to 260k tons, down from 548k tons in the same period last year. This resulted in a market share decline from 30% to 24%. Meanwhile, industry-wide urea inventories spiked to 803k tons by the end of March 2025, up from 174k tons last year. EFERT now holds 51% of this stock, versus 34% in 1QCY24—a development the company says is in line with expectations. As reported by AKD securities.
The company’s urea sales were severely impacted by weak farm economics, but EFERT has begun exploring options for urea exports, with management indicating that such a move could be considered if inventories continue to build up and subject to government approvals. Meanwhile, DAP sales plunged 71% YoY to 24k tons, as private importers gained market share, bringing EFERT’s share down to 18% from 29%. According to AKD securities.
To support sales, the company has started offering discounts on urea, with further incentives dependent on how market dynamics evolve. As per the briefing, the price gap between imported and local urea stands at PkR3,271/bag (41%), with landed international prices at PkR7,920/bag, while local prices hover around PkR4,649/bag. Looking forward, management expects a pickup in urea demand during the Kharif season, though full-year volumes are projected to be lower than in CY24, in the 6.2–6.5mn ton range.
Progress continues on the Pressure Enhancement Facility (PEF) project, aimed at boosting gas pressure from the Mari field. Part 1 of Phase 1 is complete, with Part 2 to be wrapped up by the end of the current quarter. Compressor ordering for Phase 2 is in progress. EFERT is collaborating with FFC and FATIMA on this US$300mn initiative to secure long-term gas supply.
Selling and distribution expenses were reduced to Rs3.22 billion from Rs4.39 billion, while administrative expenses increased to Rs1.24 billion from Rs1.10 billion. Notably, the company’s finance costs surged by 580%, reaching Rs1.09 billion, up from Rs160.5 million in the first quarter of 2024. Consequently, profit before tax stood at Rs4.9 billion, a significant decline from Rs12.11 billion in the same period last year.
Engro Fertilizers Limited, a subsidiary of Engro Corporation, is a leading fertilizer manufacturer in Pakistan, holding a 35% market share as of 2023. Headquartered in Karachi, the company operates major production facilities in Daharki and Port Qasim. Established in 2010, EFERT is known for its flagship products like Zarkhez, Zingro, Zorawar, and Zoron. In 2024, the company reported a profit after tax of Rs28.3 billion, reflecting an 8% increase from the previous year, attributed to enhanced operational efficiency and cost optimization.
