Pakistan’s listed fertilizer companies are expected to report a 20% year-on-year decline in second-quarter profits, as softer sales and lower dividend income offset the benefits of higher fertilizer prices, according to Topline Securities.

Despite the annual decline, sector earnings are projected to rebound 18% from the previous quarter, supported by stronger gross margins after manufacturers withdrew discounts and raised prices.

Urea prices have increased by around Rs. 100 per bag since April, while DAP prices have surged 25% year-on-year, reflecting higher international costs.

Industry data indicates urea sales rose 17% to 1.466 million tons during the quarter, driven by higher demand for products supplied by Fauji Fertilizer Company (FFC) and Fatima Fertilizer. However, DAP sales plunged 38% as higher prices discouraged purchases, resulting in an estimated 7% decline in overall sector revenue.

Among major producers, Engro Fertilizers is expected to record the sharpest earnings decline, with profit projected to fall 52% year-on-year due to significantly weaker urea and DAP sales. The company is also likely to end the quarter with urea inventories of around 652,000 tons, indicating slower market absorption.

Meanwhile, FFC’s standalone profit is expected to decline 13%, largely because last year’s earnings included unusually high dividend income from Pakistan Maroc Phosphore. On a consolidated basis, however, FFC is projected to post a 16% increase in earnings, supported by stronger urea sales and improved profitability.

The outlook reflects a mixed picture for Pakistan’s fertilizer industry, where recovering urea demand has been offset by weaker phosphate fertilizer sales amid elevated global prices.