FATIMA: Fatima Fertilizer Company Ltd. announced a substantial rise in its financial performance for the second quarter of 2025, with earnings reaching PkR8.6 billion, marking a 65% year-on-year increase. The surge is attributed to higher product offtakes, despite earnings falling short of expectations due to larger-than-anticipated discount offerings. A half-yearly dividend of PkR3.5 per share was also declared.

Revenue saw a significant increase of 51% year-over-year, reaching PkR63.9 billion. This was driven by marked increases in the sales of urea, calcium ammonium nitrate (CAN), and nitrophosphate (NP) by 2.1 times, 57%, and 27% respectively, compared to the same period last year.

Despite the higher revenue, gross margins contracted to 32.8% from 38.2% in the same period last year. The contraction was mainly due to higher discount offerings and a reduced proportion of urea sales from the base plant, which benefits from lower gas pricing.

Other income for the quarter was reported at PkR3.5 billion, representing a 65% increase year-over-year. This was driven by a 4.4 times increase in cash and short-term investments.

The finance cost rose significantly, increasing by 2.5 times year-over-year to PkR2.0 billion, primarily due to a 2.9 times increase in total borrowings. This increase was partially mitigated by declining financing rates.

The effective tax rate for the quarter was recorded at 39%, a decrease from 49% in the same period last year.

Overall, the first half of calendar year 2025 saw profitability reach PkR16.9 billion, a 25% increase from the PkR13.6 billion reported in the same period last year.

AKD Securities Limited has revised its outlook on the stock to 'Neutral' following a recent rally. The target price for June 2026 is maintained at PkR125 per share.