Fauji Fertilizer Company Limited (FFC) is expected to remain Pakistan’s leading fertilizer sector profit earner in the third quarter of 2026, as higher realized urea and di-ammonium phosphate (DAP) prices support margins despite weaker sales volumes.
Market estimates project FFC’s unconsolidated earnings at Rs14.88 per share, up 12% year-on-year, while consolidated earnings are expected to reach Rs16.12 per share. By comparison, Engro Fertilizers is projected to report earnings of Rs6.45 per share.
The expected results indicate that stronger selling prices and dividend income are helping FFC maintain its earnings lead, even as lower fertilizer offtakes weigh on sales volumes across the industry.
Higher Fertilizer Prices Support FFC Margins
FFC’s expected earnings performance is being driven more by pricing than by higher sales volumes. The company’s urea offtake declined 9% year-on-year to 756,000 tons, while DAP sales fell 22% to 198,000 tons.
Despite the decline in volumes, FFC’s gross margin is projected to improve to 32.22% in the third quarter, compared with 30.82% in the same period last year.
The improvement reflects firmer realized selling prices and the absence of discounts, which have helped support profitability amid softer demand.
FFC’s revenue is estimated at Rs124.1 billion, down 2% year-on-year but up 19% from the preceding quarter. The quarterly increase suggests an improvement in sales performance compared with the previous three-month period, even as revenue remains slightly below the year-earlier level.
Dividend income of approximately Rs4.5 billion, primarily from investments in the energy, banking and cement sectors, is also expected to contribute to earnings.
FFC Maintains a Clear Lead in Absolute Profit
FFC’s projected earnings remain significantly higher than those of Engro Fertilizers in absolute terms.
With approximately 1.44 billion shares outstanding, FFC’s expected unconsolidated earnings of Rs14.88 per share imply profit of around Rs21 billion for the quarter.
Engro Fertilizers, meanwhile, is expected to earn approximately Rs8.6 billion, based on projected earnings of Rs6.45 per share and an implied share count of roughly 1.33 billion.
FFC is also expected to announce a cash dividend of Rs11.50 per share, compared with an anticipated Rs6 per share payout by Engro Fertilizers. FFC’s payout ratio is estimated at around 77%.
These projections reinforce FFC’s position as the sector’s largest expected profit contributor, supported by its earnings base, investment income and anticipated shareholder distribution.
Phosphoric Acid Prices Weigh on Quarterly Earnings
Despite the expected year-on-year improvement, FFC’s third-quarter performance is not projected to strengthen across every measure.
Profit is expected to decline 12% compared with the previous quarter, as a 29% increase in phosphoric acid prices puts pressure on DAP margins.
The increase in raw material costs illustrates the risks facing fertilizer producers even when selling prices remain relatively supportive. Higher input expenses can reduce profitability if they cannot be fully passed on to customers.
For FFC, the expected quarterly decline suggests that improved selling prices and dividend income may not completely offset pressure in the DAP business.
Engro Fertilizers Records Faster Earnings Growth
Engro Fertilizers is expected to deliver stronger earnings growth rates in the third quarter, although its projected profit remains below FFC’s.
The company’s earnings are forecast to increase 48% year-on-year and more than double from the preceding quarter. The expected improvement is supported by urea offtake of 711,000 tons, up 21% year-on-year.
Engro’s revenue is estimated at Rs76.4 billion, representing an increase of 40%, while its gross margin is projected at 34.5%.
The higher expected gross margin reflects a comparatively strong operating performance during the quarter. However, Engro’s projected earnings of Rs6.45 per share remain well below FFC’s unconsolidated estimate of Rs14.88 per share.
The comparison highlights the distinction between growth rates and absolute profitability: Engro is expected to record faster earnings growth, while FFC retains a substantial lead in projected profit.
Fertilizer Sector Earnings Expected to Rise 20%
Across the fertilizer sector, aggregate earnings are expected to increase 20% year-on-year in the third quarter of 2026.
Sector turnover is projected at Rs200.5 billion, up 10%, while the gross margin is expected to improve to 33.09%, compared with 31.35% in the same period last year.
However, industry sales volumes remain mixed. Total urea offtake increased by only 2% to 1.9 million tons, while DAP offtake fell 20% to 272,000 tons.
Higher DAP prices appear to have cooled demand, limiting sales volumes despite stronger pricing across parts of the industry.
The figures suggest that the sector’s expected earnings growth is being supported by improved pricing and margins rather than a broad-based increase in fertilizer consumption.
Fertilizer Industry Outlook Hinges on Pricing and Demand
The third-quarter estimates point to a sector in which pricing power and cost management are becoming increasingly important to profitability.
FFC is expected to retain its earnings lead through stronger realized prices, investment income and a comparatively large profit base. Engro Fertilizers, meanwhile, is projected to post faster growth as its urea offtake recovers.
At the industry level, the decline in DAP demand remains a concern, particularly as higher input costs can place pressure on margins. The 29% quarterly increase in phosphoric acid prices is a key example of how cost pressures can affect individual product segments.
Overall, the expected third-quarter results indicate that fertilizer producers able to sustain selling prices and protect margins may outperform competitors even without substantial volume growth.