Karachi: Fauji Fertilizer Company (FFC) announced its financial results for the second quarter of 2026, revealing an unconsolidated quarterly profit of Rs24.4 billion, translating to an earnings per share (EPS) of Rs16.94. This marks a 3% year-on-year decline but a 39% increase quarter-on-quarter. The company's performance exceeded industry expectations due to higher-than-anticipated other income, bringing the half-yearly earnings to Rs41.9 billion, a 9% increase year-on-year.

According to JS Global, the surprising result was primarily driven by other income, which reached Rs17.6 billion in the second quarter, surpassing their projection of Rs12.7 billion. This includes a dividend income of approximately Rs7.9 billion and a significant one-off accounting gain of around Rs3 billion from discounting income related to the Sindh Infrastructure Cess. Net sales rose by 14% year-on-year and 9% quarter-on-quarter to Rs104 billion, attributed to a 37% year-on-year increase in Urea sales totaling 798,000 tons. Meanwhile, DAP offtakes saw a year-on-year decline of 31%, amounting to 137,000 tons during the quarter.

The company's gross margins were recorded at 33.1%, slightly down from 33.7% in the same quarter last year but up from 30.6% in the first quarter of 2026. Distribution expenses increased by 14% year-on-year and 29% quarter-on-quarter to Rs9.9 billion. The finance cost rose by 24% year-on-year to Rs2.1 billion, though it was slightly down by 2% quarter-on-quarter.

Alongside the quarterly results, FFC declared a second interim cash dividend of Rs14.50 per share, with a payout ratio of 86%. This takes the half-yearly dividend payout to Rs23 per share, compared to Rs19 per share in the first half of 2025. JS Global maintains a buy stance on FFC, citing its current trading at an estimated 2026 price-to-earnings ratio of 8.2x and a dividend yield of 9%.