Engro Fertilizers (PSX: EFERT) announced its 2025 earnings, wherein the profit-after-tax (PAT) clocked in at Rs. 22.6 billion (EPS: Rs. 16.95), down 20 percent year-on-year (YoY).
EFERT also shared its 4Q2025 financial results with a quarterly PAT of Rs. 8.4 billion (EPS: Rs. 6.26), down 19 percent YoY and up 44 percent quarter-on-quarter (QoQ).
According to Topline Securities, the result came in lower than industry expectations due to lower-than-expected gross margins, along with the one-time recognition of a super tax charge amounting to Rs. 2 billion in 4Q2025.
Net sales increased by 20 percent YoY and 86 percent QoQ to Rs. 102 billion in 4Q2025, driven by a surge in urea and DAP offtakes.
Gross margins stood at 27.7 percent in 4Q2025, below our expectation of 32.9 percent. The lower margins are mainly attributable to higher discounts offered by the company. This brings full-year 2025 margins to 30.6 percent, compared to 28.2 percent in 2024.
Distribution expenses decreased by 16 percent YoY but increased by 56 percent QoQ to Rs. 8.3 billion in 4Q2025. The higher distribution expense on a quarterly basis was due to increased sales volumes.
Other income stood at Rs. 972 million, up 90 percent YoY and 82 percent QoQ in 4Q2025.
Finance costs clocked in at Rs. 2 billion, up 40 percent YoY and 62 percent QoQ due to higher borrowings. As of December 2025, EFERT’s total debt stood at Rs. 67 billion, up 97 percent YoY.
The effective tax rate (ETR) for the quarter stood at 49 percent in 4Q2025, compared to 38 percent in 4Q2024 and 39 percent in 3Q2025. The tax charge remained high as EFERT booked a super tax provision of Rs. 1.949 billion in 4Q2025.
Along with the results, the company declared a final cash dividend of Rs. 4 per share, lower than industry expectations. This brings the total 2025 cash dividend to Rs. 15 per share (payout ratio: 64 percent in 4Q2025 vs. 104 percent in 4Q2024).
EFERT is currently trading at a 2026E P/E of 11.8x and a dividend yield of 8 percent.
