Karachi: Profits in Pakistan’s fertilizer industry are expected to climb by 52% quarter-on-quarter and 44% year-on-year in the fourth quarter of 2025, driven by unprecedented volumetric sales of urea. This surge coincides with the peak fertilizer application season for Rabi crops, resulting in a significant rise in urea demand compared to the previous quarter.
According to JS Global, urea offtake increased by 36% quarter-on-quarter and 26% year-on-year to 2.5 million tons in the fourth quarter. DAP offtakes also rose by 60% quarter-on-quarter, though they declined by 22% year-on-year to 544,000 tons. The sector’s turnover is anticipated to increase by 41% quarter-on-quarter, while experiencing a 10% year-on-year decrease, reaching Rs257 million in the fourth quarter.
Average urea prices dropped by 5% year-on-year and 1% quarter-on-quarter, reaching Rs4,349 per bag as companies offered discounts to reduce inventory. Engro Fertilizers maintained discounts of Rs350-400 per bag, while Fauji Fertilizer Company offered Rs100-120 per bag discounts. Conversely, DAP prices rose by 22% year-on-year and 8% quarter-on-quarter, averaging Rs14,530 per bag.
The sector’s gross margins are expected to stand at 34.46% in the fourth quarter, up from 27.26% in the same period last year and 31.35% in the previous quarter. Finance costs are projected to decrease by 16% year-on-year to Rs3.1 billion due to lower interest rates, and the effective tax rate is expected to be 39%, down from 45% last year.
Engro Fertilizers is predicted to report consolidated earnings of Rs9.10 per share, a more than twofold increase from the previous quarter, driven by a 76% rise in urea offtakes. On a yearly basis, earnings are expected to grow by 18% due to a 47% recovery in urea offtakes. The company is also anticipated to announce a cash dividend of Rs9 per share.
Fauji Fertilizer Company is expected to report unconsolidated earnings of Rs18.08 per share, a 34% increase from the previous quarter, supported by a 12% rise in urea offtakes. Year-on-year, earnings are forecast to increase by 60%, bolstered by an 11% rise in urea offtakes and merger-related adjustments. The company is projected to announce a cash dividend of Rs13.50 per share.