Duc Giang Chemicals (DGC) Q1 Profit Plunges 49% on Input Cost Surge, Mine Suspension

Overview

Duc Giang Chemicals (DGC) reported a steep decline in Q1 2026 earnings, with net profit falling 48.6% year-on-year to VND 430 billion. Revenue dropped 24% to VND 2,125 billion, driven by soaring input costs and the temporary suspension of the Khai truong 25 mine. The company maintains a strong cash position of VND 11.2 trillion and continues to advance its Nghi Son chemical plant project.

Key Facts

• Q1 2026 net profit: VND 430 billion, down 48.6% YoY.
• Q1 2026 revenue: VND 2,125 billion, down 24% YoY.
• Gross margin narrowed to 23%, a decline of 11.9 percentage points YoY.
• Sulfur prices tripled compared to the same period last year.
• Cash and bank deposits totaled VND 11,255 billion as of March 31, 2026, representing 62.2% of total assets.
• Operating cash flow was negative VND 1,093 billion, versus positive VND 345 billion a year earlier.
• The Nghi Son chemical plant project has a total investment of VND 2,400 billion; VND 944.5 billion was spent by end-Q1 2026.

What Happened

Duc Giang Chemicals (DGC) released its Q1 2026 financial statements showing a sharp profit decline. The company attributed the drop to a surge in raw material costs, particularly sulfur, which tripled in price, as well as higher electricity, coal coke, and ammonia costs. Additionally, the Khai truong 25 mine was temporarily suspended for investigation, forcing DGC to rely entirely on imported and purchased ore, raising the cost of yellow phosphorus production.

According to MBS Research, the combination of rising costs and lower revenue compressed gross margin to 23%, down 11.9 percentage points. The research unit also noted increased transportation expenses due to Middle East tensions. Operating cash flow turned negative VND 1,093 billion, partly due to a VND 1,139 billion cash dividend payment.

Market Context

DGC shares closed at VND 56,000 on April 15, 2026, down 1.07% with volume of 332,600 shares on HOSE. The stock has faced pressure amid the earnings miss and operational disruptions. The chemicals sector in Vietnam has been impacted by volatile global commodity prices and geopolitical risks. DGC’s large cash pile provides a buffer, but the suspension of the Khai truong 25 mine remains a key uncertainty.

Strategic Significance

The earnings decline underscores DGC’s vulnerability to input cost spikes and operational disruptions at its captive mine. However, the company’s massive cash reserves (VND 11.2 trillion) offer financial flexibility to fund the Nghi Son project without debt. The Nghi Son plant, with a total investment of VND 2,400 billion, is expected to diversify DGC’s product base and reduce reliance on phosphorus. Successful execution could restore growth, but near-term margins will depend on the resolution of the mine suspension and cost normalization.

What to Watch

• Resolution timeline for the Khai truong 25 mine suspension and its impact on Q2 2026 production costs.
• Progress of the Nghi Son chemical plant construction and any updates on commissioning.
• Trends in global sulfur and phosphorus prices, which directly affect DGC’s gross margin.
• Q2 2026 earnings release for signs of margin recovery or further deterioration.
• Any regulatory developments regarding the mine investigation and potential fines or operational changes.