FFC expects to become Shariah-compliant by the end of 2025

KARACHI: The management expects Fauji Fertilizer (FFC) to become Shariah-compliant by the end of 2025. As of Jun-2025, most of the funds have been converted from conventional to Islamic funds, Topline Securities stated quoting Corporate Briefing Session held on Wednesday.

The management also highlighted that Askari Bank remains a hurdle, and they target to convert 30 per cent of its branches to Islamic banking by year-end and achieve full conversion by 2027.

FFC conducted its Corporate Briefing Session on Wednesday morning where management discussed financial performance and future outlook. Management expects the industry’s urea inventory to remain around 1.3 million tons by December 2025.

Management also communicated that no such discussions are ongoing with the government regarding urea export. FFC reported a dividend income of Rs 9 billion from its energy businesses, Rs 7 billion from PMP, and the remaining amount as interest income on cash and cash equivalents in 2Q2025.

The company offered no discounts on urea in 1Q2025, while only nominal discounts were given in 2Q2025.

Inventory level of the company remained at 338,000 tons of Urea and 134,000 tons of DAP as of Jun-2025 vs industry inventory of Urea and DAP to 1,310,000 tons and 336,000 tons, respectively.

FFC’s market share in Urea and DAP declined from 52 per cent to 48 per cent and from 71 per cent to 64 per cent, respectively, in 1H2025. Phos Acid is currently trading at US$1,250 per metric ton.

Debt to equity ratio of the company is 16 per cent/84 per cent as of Jun-2025 compared to 19 per cent/81 per cent in Dec-2024.

To recall, FFC announced highest ever unconsolidated quarterly profit of Rs 25.2 billion (EPS: Rs 17.7), up 62 per cent YoY and 90 per cent QoQ. This takes 1H2025 earnings to Rs 38.5 billion (EPS: Rs27.02), up 47 per cent YoY. Along with the results, the company also declared its second interim cash dividend of Rs 12 per share. This takes the total 1H2025 cash dividend to Rs 19 per share (payout ratio: 70 per cent).

Also read: Pakistan’s urea sales drop 19 per cent MoM, 1 per cent YoY in July 2025