Engro Fertilizers reports drop in revenue but maintains profitability amid challenging market conditions

Engro Fertilizers (EFERT) announced its 1Q2025 financial result today. The company reported a dramatic 59% drop in net sales compared to the previous year, falling from PKR 73.78 billion in 2024 to PKR 30.29 billion in 2025. Despite the steep decline in revenue, the company maintained profitability, posting a net profit of PKR 2.90 billion for the period. This represents a 63% decline from last year’s profit of PKR 7.76 billion, but it signals resilient cost management and strategic financial decisions made during the downturn.

Key Financial Highlights (FY 2025 vs FY 2024):

Net Sales: PKR 30.29 billion ↓ from PKR 73.78 billion

Gross Profit: PKR 10.68 billion ↓ from PKR 17.20 billion

Profit Before Taxation: PKR 4.93 billion ↓ from PKR 12.11 billion

Net Profit: PKR 2.90 billion ↓ from PKR 7.76 billion

The company saw reduced selling and distribution expenses (down 26%) and administrative expenses (down 12%), reflecting tighter operational efficiency. However, a significant increase in finance costs (up nearly 580%) and a sharp drop in other income (down 47%) weighed on the overall profitability.

One notable gain was the recognition of a PKR 10.5 million allowance for a subsidy receivable from the Government of Pakistan (Gop). However, this was significantly lower than the PKR 57.8 million recorded last year.

While the results reflect the impact of a challenging economic environment, the company’s ability to remain profitable despite these headwinds demonstrates strong fiscal discipline and an adaptive strategy.

According to a report by Topline Pakistan Research, the company declared a cash dividend of Rs 2.25/share along with its results, which was in line with market expectations. The 1q2025 result exceeded our expectations due to higher-than-expected gross margins.

Other income decreased by 76% YoY to Rs313mn in 1Q2025 due to a decline in cash and cash balances and a fall in interest rates. Finance cost clocked in at Rs1.1bn, up 6.7x YoY and down 26% QoQ. The significant increase on a YoY basis is attributed to an increase in short-term borrowings.