Engro Fertilizers’ Profit Falls 20% in 2025 Despite Higher Sales

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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.

Sabica Tahira

Experienced Content Writer & Creative Strategist I am an experienced writer passionate about creating engaging, research-driven content across technology, AI, fintech, and cryptocurrency. My goal is to inform, inspire, and connect audiences through impactful storytelling while helping brands build trust and a strong digital presence.