Fatima Fertilizer Company Limited: performance and outlook

Fatima Fertilizer Company Limited (PSX: FATIMA) was incorporated in Pakistan in 2003 as a result of joint venture between Fatima Group and Arif Habib Group. The company has three production plants situated at Multan, Sheikhupura and Sadiqabad.

The company is engaged in the manufacturing, buying, selling, importing and exporting of chemicals and fertilizers.

The fully integrated production facility of the company produces two intermediate products i.e. Ammonia and Nitric Acid and four final products i.e. Urea, Calcium Ammonium Nitrate (CAN), Nitro Phosphate (NP) and Nitrogen Phosphorous Potassium (NPK).

Pattern of Shareholding

As of December 31, 2025, FATIMA has a total of 2100 million shares outstanding which are held by 11,652 shareholders. Associated companies, undertakings and related parties have the majority stake of 43.68 percent in the company followed by directors, CEO, their spouse and minor children holding around 31 percent of the company’s shares.

Sponsors account for 12.30 percent shares of FATIMA while local general public hold 4.05 percent shares. Around 3.17 percent of the company’s shares are held by Modarabas & Mutual. The remaining shares are held by other categories of shareholders.

Historical Performance (2021-24)

Except for a drop in 2025, the topline of FATIMA followed an upward trajectory over the period under consideration. Conversely, its bottomline mounted in 2021 followed by a decline in 2022.

In the subsequent two years, FATIMA’s bottomline considerably recovered after which it dipped in 2025. The company’s margins rode a downhill in journey in 2021 and 2022. In 2023, gross margin continued to dip while operating and net margins ticked up. FATIMA’s margins posted a significant growth in 2024 and 2025. During the period under consideration, the company’s margins attained their optimum level in 2025. The detailed performance review of the period under consideration is given below.

2021 was the year when the company was able to boast an unprecedented sales volume of 2.68 million tons, up 43.39 percent year-on-year. This was on the back of increased production capacity accomplished by the company in 2020. This coupled with a hefty rise in the prices of fertilizer products resulted in a record high topline growth of 57.84 percent year-on-year in 2021.

FATIMA’s net sales clocked in at Rs.112,488.42 million. The demand of fertilizers remained strong during the year primarily owing to highly favorable wheat support price which encouraged farmers to increase the usage of nitrogenous fertilizers.

Gross profit multiplied by 49.63 percent year-on-year in 2021; however, GP margin took a dive to clock in at 38.30 percent owing to an increase in phosphate prices, depreciation of Pak Rupee, volatile freight market and end of concessionary period gas. This was against the GP margin of 40.40 percent recorded in 2020.

Distribution and administrative expenses also grew considerably owing to full-year operation of three production plants and robust volumes. Other expense magnified by 178.80 percent in 2021 mainly on account of booking an impairment loss of its brand “Bubber Sher” during the year. Other income dropped by 33.14 percent as monetary easing during the year squeezed the profit on loan to related parties.

Besides, there was no gain recorded on the re-measurement of investment classified as FVTPL. Loss allowance on subsidy receivable from the government and unwinding of provision on GIDC also played a role in diluting the net margin of the company in 2021.

The bottomline was able to post year-on-year growth of 39.17 percent in 2021 to clock in at Rs.18,474.27 million with EPS of Rs.8.80 and NP margin of 16.42 percent. This was against the EPS of Rs.6.32 and NP margin of 18.63 percent registered in 2020.

In 2022, FATIMA’s topline grew by 41.17 percent year-on-year to clock in at Rs.158,797.10 million. This came on the back of 1.46 percent growth in the company’s sales volume which clocked in at 2.716 million tons in 2022. Moreover, the prices of all the products staggeringly increased during the year on account of global commodity super cycle.

Inflation, Pak Rupee depreciation, towering commodity prices in the international market and full-year impact of increase in gas prices translated into 53.21 percent surge in cost of sales in 2022. Gross profit improved by 21.76 percent year-on-year in 2022, however, GP margin fell to its 6-year lowest level of 33 percent.

Distribution and administrative expense recorded a steep hike of 58.66 percent and 52.94 percent respectively in 2022.

The main growth drivers were high sales volume, fuel price hike, inflationary impact and increase in the number of employees to 3724. Exchange loss, impairment booked against advances and loss on the re-measurement of investments classified as FVTPL drove other expense up by 36.86 percent year-on-year in 2022.

Higher discount rate pushed up the profit on loan to related parties as well as profit on investments and saving deposits. This coupled with gain recorded on the disposal of stores and spares resulted in 72.62 percent increase in other income in 2022. Operating profit built up by 11.43 percent year-on-year in 2022, however, OP margin fell to 21.52 percent.

Finance cost spiked by 64.62 percent year-on-year in 2022 which was the consequence of higher discount rate coupled with a massive rise in both short-term and long-term borrowings. FATIMA recorded 15.29 percent lesser unwinding of provision for GIDC in 2022. Loss allowance on subsidies receivable from the government ticked up by 4.53 percent in 2022.

In 2022, FATIMA recorded share of loss worth Rs.68.41 million from associate its company (Fatima Agri Sales and Services Private Limited). Retrospective imposition of super tax also played its due role, resulting in 22.58 percent thinner bottomline worth Rs.14,301.98 million in 2022. EPS slipped to Rs.6.81 in 2022. NP margin also stood at its lowest level of 9 percent in 2022.

FATIMA registered year-on-year growth of 46.57 percent in its topline which clocked in at Rs.232,754.82 million in 2023. This was on account of 5.52 percent higher sales volume which clocked in at 2.866 million tons in 2023.

Higher dispatches were the result of robust demand of NP as the country’s agriculture sector showed signs of recovery after the devastating floods of 2022. The inclusion of full year operations of Multan plant also buttressed the results of the company in 2023.

During the year, NP contributed 48 percent to the overall sales revenue of FATIMA followed by UREA (23 percent) and CAN (18 percent). Cost of sales soared by 50.79 percent year-on-year on account of Pak Rupee depreciation, sky-rocketing inflation and higher fuel cost.

Furthermore, reduction in gas subsidy released by the government also inflated FATIMA’s cost of sales in 2023. This squeezed its GP margin to 31.11 percent in 2023, while there was 38 percent year-on-year rise in gross profit in absolute terms.

Distribution and administrative expenses escalated by 30.27 percent and 37.40 percent respectively on account of an increase in the operational activity and greater volumes. Implementation of axle load regulations and elevated fuel prices also pushed up operating expense in 2023.

Other expense rose by 19.10 percent in 2023 on account of brand amortization, exchange loss and increased provisioning for WWF and WPPF. Other income strengthened by 248.33 percent in 2023 due to increased profit on investment and saving accounts, gain on the re-measurement of investments classified as FVTPL and mark-up on credit sale of fertilizers.

Operating profit improved by 56.36 percent in 2023 with OP margin climbing up to 22.96 percent. Finance cost mounted by 40.48 percent year-on-year in 2023 primarily due to higher discount rate. This was despite the fact that the company considerably reduced its outstanding borrowings during the year.

Unwinding of provision for GIDC slid by 29.31 percent in 2023. Conversely, FATIMA booked 620.54 percent higher loss allowance on subsidy receivable from the Government of Pakistan in 2023.

FATIMA’s net profit was recorded at Rs.22,399.40 million in 2023, up 56.62 percent year-on-year. This translated into EPS of Rs.10.67 and NP margin of 9.62 percent in 2023.

In 2024, FATIMA registered a thin growth of 2.43 percent to clock in at Rs. 238,422.13 million.

The topline growth came on the back of stable products prices during the year. Conversely, sales volume dropped by 12 percent to clock in at 2.52 million tons in 2024. This was on account of poor farm economics due to wheat crisis and 50 percent lower cotton production on account of heavy rainfall and heat wave.

Cost of sales dropped by 5.88 percent in 2024 as higher input cost was greatly offset by the release of the remaining balance of subsidy on RLNG which was supplied to the Sheikhupura plant.

During the year, the company amalgamated the operations of its Sheikhupura plant to Fatimafert Limited, a wholly owned subsidiary. Furthermore, the management also gave approval for amalgamating its Multan plant into Pak Arab Fertilizers, a wholly owned subsidiary.

However, the amalgamation process of Multan plant is awaiting regulatory approval. This resulted in 20.84 percent higher gross profit in 2024 with GP margin climbing up to 36.70 percent. Inflationary pressure, high inventory level and axle load requirements resulted in 33.71 percent higher distribution expense in 2024 Administrative expense mounted by 22.46 in 2024 due to higher payroll expense on the back of inflationary pressure.

Higher profit related provisioning, brand amortization and exchange loss resulted in 38.63 percent higher other expense in 2024. However, it was greatly offset by 80.49 percent higher other income recorded in 2024 on the back of higher return on investments.

FATIMA recorded 23.67 percent improvement in its operating profit in 2024 with OP margin clocking in at 27.72. Finance inched up by only 2.36 percent in 2024 due to better cash flow management and efficient utilization of borrowing lines. The onset of monetary easing towards the end of the year also kept the finance cost in check in 2024.

During the year, FATIMA obtained greater long-term loans to finance its investment plans. Unwinding of provision for GIDC plummeted by 73.33 percent in 2024. The company booked 24 percent lesser loss allowance on subsidy receivable from the government. Share of loss from associates surged by 6136.26 percent to clock in at Rs.87.54 million in 2024. This was mainly on account of loss of share worth Rs. 94.856 million from National Resources (Private) Limited. Effective tax rate dropped from 53 percent in 2023 to 42 percent in 2024 owing to retrospective application of super tax in the previous year.

FATIMA posted 56.18 percent higher net profit to the tune of Rs.34,983.24 million in 2024. This translated into EPS of Rs.16.66 and NP margin of 14.67 percent in 2024.

In 2025, FATIMA’s net sales deteriorated by 28.67 percent to clock in at Rs.170,057.70 million. This was on account of poor farm economics which began last year due to wheat crisis as farmers couldn’t get support price in 2024. Cotton production also drastically fell due to unfavorable weather conditions.

Drop in international commodity prices also wreaked havoc on the farmer community, leaving them with lesser capital. After carving out its Sheikhupura plant in the previous year, in 2025, the company carved out the operations of its Multan plant to its wholly owned subsidiary PakArab Fertilizers Limited.

Hence, one of the reasons of a thinner topline in 2025 was because it included the operations of Sadiqabad plant and the leftover inventory from the Multan Plant.

Gross profit dipped by 18.45 percent in 2025, however, GP margin improved to attain its highest level of 41.96 percent since 2019. Selling & distribution expense dipped by 16.40 percent in 2025 due to lower freight charges, petite advertisement budget and lesser salaries of sales force.

Administrative expense also slid by 23.60 percent in 2025 because the company carved out the operations of its two plants in 2024 and 2025 which led to its workforce descending from 4498 in 2024 to 3232 in 2025.

Other expense fell by 59.05 percent in 2025 due to lesser profit related provisioning, decline in exchange loss due to stable local currency, no late payment surcharge on payables and no impairment booked on brand and plant & machinery during the year.

Other income also deteriorated by 18.68 percent in 2025 due to thinner profit on loans to related parties and lesser gain recorded on the re-measurement of short-term investments. Operating profit diminished by 11.66 percent in 2025 yet OP margin climbed up to 34.33 percent.

Despite monetary easing, finance cost surged by a massive 63.50 percent in 2025 due to huge interest payments made on the current portion of long-term finances. Short-term borrowings also increased during the year to meet the working capital requirements.

Net profit diminished by 12.91 percent to clock in at Rs.30,468.05 million in 2025. This translated into EPS of Rs.14.51 and NP margin of 17.92 percent in 2025.

Recent Performance (1QCY26)

During the first quarter of CY26, FATIMA posted 33.81 percent descent in its topline which clocked in at Rs.27,929.24 million. This was due to reduced sales volume on the back of poor farm economics and irregular production operations due to gas supply barriers.

However, uptrend in the prices of fertilizer due to escalating geopolitical tensions enabled the company to record a GP margin of 46.69 percent in 1QCY26 versus 43.94 percent recorded in 1QCY25. Lower sales volume led to 13.79 percent thinner distribution expense in 1QCY26.

Conversely, administrative expense surged by 43.25 percent in 1QCY26 due to higher payroll expense and donations. Lower profit related provisioning appears to be the cause of 36 percent decline in other expense in 1QCY26.

Other expense was offset by other income of Rs.1351.76 million recorded in 1QCY26, down 41.47 percent year-on-year. Leaner other income is apparently due to monetary easing and a massive drop in short-term investments.

FATIMA recorded 43 percent plunge in its operating profit in 1QCY26 with OP margin clocking in at 30.57 percent versus 35.51 percent in the comparable period of last year. Monetary easing and the payment of a substantial portion of long-term loans led to finance cost plummeting by 11.58 percent in 1QCY26.

The company recorded 48.09 percent weaker net profit to the tune of Rs.4189.33 million in 1QCY26. This led to EPS of Rs.1.99 and NP margin of 15 percent in 1QCY26 as against EPS of Rs.3.84 and NP margin of 19.13 percent recorded in 1QCY25.

Future Outlook

Fertilizer demand is expected to increase in the Kharif season with FATIMA being one of the key beneficiaries on account of its sustainable operations and long-term investment strategies. To ensure uninterrupted supply of fertilizer, the company launched six retail outlets in 2024 with the plan of launching more outlets in the ongoing year. This will enhance the company’s market presence and enable it to sell its products at controlled prices.

Recently, FATIMA’s joint venture company “National Resources (Private) Limited has discovered copper-gold resources in the province of Baluchistan. The company is planning to heavily invest in mining & exploration, aviation and real-estate to diversify its earning avenues and buttress its financial performance.