Karachi: Fauji Fertilizer Company (FFC) announced its financial results for the third quarter of 2025, revealing a 22% year-on-year decrease in its unconsolidated earnings per share (EPS), which stood at Rs13.5. The decline was primarily attributed to reduced dividend income. Despite the quarterly drop, the company's nine-month earnings for 2025 rose by 14% year-on-year, reaching Rs57.6 billion with an EPS of Rs40.5.

On a consolidated basis, FFC's profits saw a 3% decline year-on-year for the third quarter. However, the company experienced a 25% increase quarter-on-quarter, bringing consolidated profits to Rs24.5 billion with an EPS of Rs17.2. This improvement was credited to a stronger contribution from the core business operations.

The company's net sales improved significantly, rising by 18% year-on-year and 39% quarter-on-quarter. This growth was driven by higher offtakes and elevated prices of Diammonium Phosphate (DAP), a key fertilizer product.

Despite the increase in sales, FFC's gross margins fell to 31%. The decline was due to higher discounts and increased contributions from Fauji Fertilizer Bin Qasim Limited (FFBL), a subsidiary of FFC.

Other income for the company reached Rs6.3 billion in the third quarter, a decrease of 50% year-on-year and 70% quarter-on-quarter. The reduction was linked to lower dividend income from subsidiaries and associates. In the previous quarter, FFC had received dividends of Rs9 billion from its energy business and Rs7 billion from PMP.

The finance cost for the quarter was Rs1.5 billion, reflecting a 25% year-on-year and 9% quarter-on-quarter decline, attributed to reduced borrowing.

The company's tax expense was Rs13.1 billion, with an effective tax rate of 41%, compared to Rs14.1 billion and a 36% tax rate in the same quarter of the previous year.

Alongside the financial results, FFC declared its third interim cash dividend of Rs9.5 per share. This brings the total cash dividend for the first nine months of 2025 to Rs28.5 per share, maintaining a payout ratio of 70%.

JS Global maintains a 'Buy' stance on FFC, noting that the stock is currently trading at a forward price-to-earnings ratio of 8.1x for 2026, with a dividend yield of 9%.