Engro Fertilizers (PSX: EFERT) reported a 20% decline in profit-after-tax (PAT) for 2025, amounting to Rs. 22.6 billion (EPS: Rs. 16.95), despite a significant rise in sales. The drop reflects lower-than-expected gross margins and the impact of a one-time super tax charge in the fourth quarter.
Quarterly Performance
| Metric | 4Q2025 | Change YoY | Change QoQ |
| PAT | Rs. 8.4 billion | -19% | +44% |
| EPS | Rs. 6.26 | -19% | +44% |
| Net Sales | Rs. 102 billion | +20% | +86% |
| Gross Margin | 27.7% | – | – |
| Distribution Expenses | Rs. 8.3 billion | -16% | +56% |
| Finance Cost | Rs. 2 billion | +40% | +62% |
| Other Income | Rs. 972 million | +90% | +82% |
| Effective Tax Rate | 49% | +11pp vs 4Q2024 | +10pp vs 3Q2025 |
Key Points
- Sales surged due to strong urea and DAP offtake, with net sales reaching Rs. 102 billion in 4Q2025.
- Gross margins were lower than expected at 27.7% (vs. forecast 32.9%), mainly due to higher discounts.
- Distribution expenses rose 56% QoQ due to increased volumes.
- Finance costs increased due to higher borrowings; total debt rose to Rs. 67 billion, up 97% YoY.
- The super tax charge of Rs. 1.949 billion contributed to a high effective tax rate of 49%.
Engro Fertilizers declared a final cash dividend of Rs. 4 per share, bringing the total 2025 cash dividend to Rs. 15 per share. The payout ratio fell to 64% in 4Q2025 from 104% in 4Q2024.
The stock currently trades at a 2026E P/E of 11.8x with a dividend yield of 8%, reflecting solid market positioning despite earnings pressures.
The decline in profit highlights margin pressures even amid rising volumes. While strong sales supported revenue growth, higher discounting, finance costs, and tax provisions limited net profitability. Investors are advised to monitor margin trends and debt levels in 2026, as cost control and pricing will be key to sustaining earnings growth.
