Karachi, April 22, 2025 – Engro Fertilizers (EFERT), one of Pakistan’s leading fertilizer producers, reported a steep 63% year-on-year decline in its after-tax profit for the first quarter of calendar year 2025.
The company posted a profit of Rs2.90 billion for the three-month period ending March 31, 2025, compared to Rs7.76 billion in the same period last year.
Earnings per Share (EPS) for the quarter stood at Rs2.17, significantly lower than Rs5.81 recorded in 1QCY2024. Despite the sharp profit decline, Engro Fertilizers announced a cash dividend of Rs2.25 per share, meeting market expectations, according to analysts at Topline Securities.
Interestingly, the result was still slightly better than anticipated, thanks to stronger-than-expected gross margins. The company recorded gross margins of 35% in 1QCY2025, a notable improvement from 23.3% in 1QCY2024 and consistent with margins seen in the previous quarter. This improvement was primarily attributed to the absence of costly imported urea and a stable gas price environment.
Engro Fertilizers saw its net sales plunge by 59% year-on-year and 64% quarter-on-quarter. This was driven by a considerable decline in the offtake of key products — urea and DAP — which dropped 58% and 71% YoY, respectively. On a quarterly basis, offtake declined 63% for urea and 78% for DAP. Despite offering a Rs100/bag discount on urea to remain competitive, the company faced sluggish demand. Notably, there was no plant turnaround during the quarter, allowing consistent production.
Selling and distribution expenses were also trimmed by 27% YoY to Rs3.2 billion, reflecting the lower sales volume. Meanwhile, other income fell sharply by 76% YoY to Rs313 million, largely due to reduced cash balances and lower interest income. Finance costs jumped 6.7 times YoY to Rs1.1 billion due to a rise in short-term borrowings, although they declined 26% QoQ.
Engro Fertilizers’ tax expense for the quarter came in at Rs2.0 billion, reflecting an effective tax rate of 41.2%, higher than the 36% rate in 1QCY2024. The stock currently trades at a 2025E P/E ratio of 7.5x and offers a dividend yield of 13.2%, making it a potentially attractive option for dividend-seeking investors despite recent headwinds.