FFC reports 4QCY25 earnings below expectations due to rising costs; shares hit a lower lock.

Fauji Fertiliser Company Ltd. (FFC) has released its financial results for the fourth quarter of calendar year 2025, revealing standalone earnings of PKR 15.9 billion, or PKR 11.2 per share. This marks a 15% increase from the previous year’s earnings of PKR 13.8 billion (PKR 9.7 per share). However, the results fell short of analysts’ expectations primarily due to higher-than-anticipated costs of goods sold (COGS) and increased taxation.

In its quarterly report, FFC indicated that revenue remained unchanged year-on-year at PKR 149 billion. The growth in urea sales volume was offset by declines in DAP sales and by discounts on urea. The company’s gross margins contracted slightly, to 25.2% from 25.7% in the same period last year, due to higher repair and maintenance expenses during annual turnarounds at Port Qasim and Plant-II.

Cost-cutting measures were evident in distribution expenses, which fell 14% year-on-year to PKR 8.9 billion, largely due to lower DAP sales volume. Additionally, other income fell by 20% owing to lower interest rates and reduced short-term investments, while finance costs declined by 1% to PKR 1.6 billion, reflecting lower policy rates despite a rise in outstanding debt.

For the full calendar year 2025, FFC reported total earnings of PKR 73.6 billion, a 14% increase from the previous year, primarily driven by growth in sales and dividend income. The company announced a cash dividend of PKR 8.5 per share.

Despite the challenging conditions, AKD Research maintains a ‘BUY’ rating for FFC with a target price of PKR 801 per share. Analysts cite several factors contributing to this positive outlook, including lower gas costs that are expected to enhance margins, a recovery in nutrient sales amid improving farm economics, stable dividend income from power and banking subsidiaries, and better performance from the food business through increased market penetration and cost efficiencies.

For more detailed insights, you can view the complete report [here](https://research.akdsl.com/639052926438943497.pdf).

Courtesy – AKD Research