PSX Fertilizer Giants Expect 20% Fall in Profits, May Skip Dividend Payouts

Pakistan’s listed fertilizer companies are expected to post a 20 percent year on year decline in profits for the second quarter of 2026, mainly due to lower dividend income and weaker fertilizer sales, according to estimates by Topline Securities.

The brokerage expects earnings to improve 18 percent compared with the previous quarter, supported by stronger gross margins after fertilizer manufacturers rolled back discounts and increased prices.

Urea prices have risen by about Rs. 100 per bag since April, while average DAP prices are up 25 percent year on year amid higher international prices.

Industry data shows urea offtake increased 17 percent year on year to 1.466 million tons during the quarter, driven primarily by Fauji Fertilizer Company (FFC) and Fatima Fertilizer.

However, DAP offtake fell 38 percent as higher prices reduced demand. Overall fertilizer sector revenue is expected to decline 7 percent year on year despite the increase in urea sales.

Among major companies, Engro Fertilizers is expected to post a 52 percent year on year decline in earnings due to lower sales volumes, with urea sales projected to fall 41 percent and DAP sales 68 percent. The company is also estimated to end the quarter with urea inventories of 652,000 tons, reflecting slower sales.

Fauji Fertilizer Company (FFC) is expected to report a 13 percent decline in standalone earnings, largely because last year’s results included exceptionally high dividend income from Pakistan Maroc Phosphore (PMP). However, on a consolidated basis, FFC’s earnings are projected to increase 16 percent, supported by higher urea sales and improved margins.

The earnings preview comes as Pakistan’s fertilizer market shows mixed trends.

While urea demand has recovered, supported by stronger farm activity, higher international prices have pushed up DAP prices, weighing on phosphate fertilizer demand and overall sector profitability.