Karachi: Fauji Fertilizer Company (FFC) announced its financial results for the third quarter of 2025, revealing a 22% year-on-year decline in earnings per share (EPS) to Rs13.5. The company's unconsolidated quarterly profit stood at Rs19.2 billion, primarily affected by lower dividend income.
The company's nine-month earnings for 2025, however, showed a 14% year-on-year increase, reaching Rs57.6 billion with an EPS of Rs40.5. Despite the quarterly decline, this suggests an overall positive performance for the first nine months of the year.
On a consolidated basis, FFC's profits saw a slight 3% year-on-year decrease in the third quarter. Nevertheless, there was a 25% quarter-on-quarter increase, bringing consolidated profits to Rs24.5 billion with an EPS of Rs17.2. This rise was attributed to a higher contribution from the core business operations.
The company's net sales improved significantly, with an 18% year-on-year and 39% quarter-on-quarter increase. This growth was driven by higher offtakes and elevated prices of Diammonium Phosphate (DAP), a key product.
FFC's gross margins declined to 31%, influenced by higher discounts and increased contributions from Fauji Fertilizer Bin Qasim Limited (FFBL). Additionally, other income fell sharply by 50% year-on-year and 70% quarter-on-quarter, due to lower dividends from subsidiaries and associates.
Finance costs also saw a reduction, clocking in at Rs1.5 billion, a decrease of 25% year-on-year and 9% quarter-on-quarter, attributed to a decline in borrowing. Tax expenses were reported at 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.
In conjunction with the financial results, FFC declared a 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, translating to a payout ratio of 70%.
Despite the quarterly challenges, JS Global maintains a 'Buy' stance on FFC, with the stock currently trading at a forecasted 2026 price-to-earnings ratio of 8.1x and a dividend yield of 9%.