DGC Q1 2026 Net Profit Plunges 48.6% Amid Leadership Arrests

Overview

Duc Giang Chemicals Group (DGC) reported a sharp decline in Q1 2026 consolidated net profit, down 48.6% year-on-year to VND 430 billion, the lowest since Q3 2021. The results were hit by soaring raw material costs, particularly sulfur, and a temporary halt at its key apatite mine (Khai truong 25) due to an investigation. The company is also navigating a leadership crisis after its chairman and vice chairman were arrested in March.

Key Facts

• Q1 2026 consolidated net profit: VND 430 billion, down 48.6% year-on-year.
• Q1 2026 revenue: VND 2,125 billion, down 24% year-on-year.
• Gross margin narrowed to 23% from 34.8% a year earlier, the lowest since end-2020.
• Sulfur input price tripled year-on-year; other costs (electricity, coke, ammonia) also rose.
• Khai truong 25 apatite mine in Lao Cai suspended for investigation, forcing reliance on imported ore.
• Parent company net profit rose 10% to VND 833 billion, but core operating profit fell ~45% to VND 38.6 billion.
• Chairman Dao Huu Huyen and Vice Chairman Dao Huu Duy Anh were arrested on March 17; an extraordinary shareholder meeting is set for May 8 to replace them.

What Happened

Duc Giang Chemicals Group (DGC) released its Q1 2026 consolidated financial statements showing a steep drop in profitability. Revenue fell 24% year-on-year to VND 2,125 billion, while net profit plunged 48.6% to VND 430 billion, the weakest quarterly result since Q3 2021. The company attributed the decline to a surge in raw material costs, notably sulfur, which tripled in price, along with higher electricity, coke, and ammonia costs. Additionally, the temporary shutdown of Khai truong 25, a key apatite mine in Lao Cai, forced DGC to rely entirely on imported ore, further raising production costs for yellow phosphorus.

At the parent-company level, net profit rose 10% to VND 833 billion, but this was driven by VND 795 billion in profit distribution from its subsidiary Duc Giang Lao Cai Chemicals Co., Ltd. Excluding these financial items, core operating profit fell about 45% to VND 38.6 billion. The company also faces a leadership vacuum after Chairman Dao Huu Huyen and Vice Chairman Dao Huu Duy Anh were arrested on March 17. An extraordinary shareholder meeting on May 8 will seek to remove them and elect three new board members, though candidates have not yet been announced.

Market Context

DGC shares closed at VND 56,000 on April 15, down 1.07% on volume of 332,600 shares, reflecting investor caution. The stock trades on HOSE. The chemicals sector has been under pressure from rising global input costs, but DGC’s specific headwinds—mine shutdown and leadership instability—compound the risk. The company’s cash and deposits remain high at VND 11,255 billion (62% of total assets), providing a buffer, but the core business deterioration is notable.

Strategic Significance

DGC’s integrated model, built on captive apatite reserves, has historically provided a cost advantage in phosphorus production. The mine suspension undermines this advantage, exposing the company to volatile international ore prices. The leadership arrests add governance uncertainty, potentially delaying strategic decisions and investor confidence. The upcoming shareholder meeting will be critical to restoring stability. Long-term, DGC’s strong cash position and market share in phosphorus chemicals remain assets, but near-term earnings visibility is poor.

What to Watch

• Outcome of the May 8 extraordinary shareholder meeting and the identity of new board members.
• Resolution of the Khai truong 25 mine investigation and timeline for restart.
• Q2 2026 earnings release to assess whether cost pressures persist.
• Any further regulatory or legal developments related to the arrested executives.
• Changes in foreign ownership limits or investor sentiment as governance concerns evolve.