Descon Oxychem Reports Sharp Decline in FY26 Profit
Descon Oxychem Limited’s annual profit more than halved in the year ended June 30, 2026, as lower sales and compressed margins weighed heavily on its financial performance.
On a standalone basis, net profit declined 62 percent to Rs303.3 million from Rs790.2 million a year earlier. Earnings per share (EPS) fell to Rs1.73 from Rs4.51.
Net sales also decreased 16 percent to Rs4.99 billion from Rs5.92 billion.
Gross Profit Nearly Halves
The decline in sales was accompanied by significant pressure on profitability.
Standalone gross profit fell almost half to Rs864.4 million from Rs1.70 billion in the previous year.
Operating profit dropped to Rs370.7 million from Rs1.26 billion, reflecting the combined impact of weaker sales and tighter margins.
The company also faced a sharp increase in financing expenses. Finance cost surged to Rs64.9 million from just Rs9.9 million a year earlier.
Other income, however, increased to Rs136.6 million during the year.
Consolidated Earnings Also Fall Sharply
The group’s consolidated results were stronger than the parent-only figures but still showed a substantial decline.
Consolidated sales stood at Rs5.11 billion, compared with Rs6.00 billion in FY25.
Net profit attributable to shareholders fell to Rs393.6 million from Rs860.2 million a year earlier, while consolidated EPS declined to Rs2.25 from Rs4.91.
The figures indicate that the decline in profitability extended across the group despite the consolidated business generating slightly higher earnings than the standalone company.
Dividend Maintained Despite Lower Earnings
Despite the steep fall in profit, the board recommended a final cash dividend of Rs2 per share, equivalent to 20 percent.
Descon Oxychem had already paid an interim dividend of Rs2 per share for the half-year ended December 31, 2025.
If approved, the final payout will take the full-year cash distribution to Rs4 per share, maintaining the same Rs2 interim and Rs2 final dividend pattern followed last year.
No bonus shares or right shares have been recommended.
Equity Declines as Dividends Exceed Profit
The company’s weaker earnings were also reflected in its standalone balance sheet.
Shareholders’ equity declined to Rs2.87 billion from Rs3.27 billion. During the year, Rs700 million of dividends were charged against profit of Rs303 million.
This means the company distributed substantially more than the profit generated during FY26, contributing to the reduction in equity.
Short-Term Borrowings Rise Sharply
Descon Oxychem also recorded a significant increase in short-term borrowings under markup arrangements.
These borrowings rose to around Rs705 million from Rs114 million a year earlier.
Meanwhile, cash and bank balances fell to Rs100 million from Rs192 million.
The combination of higher short-term borrowing and lower cash reserves points to greater pressure on the company’s working-capital position during the year.
Annual General Meeting Scheduled for October 20
The company’s annual general meeting will be held on October 20, 2026, at 10am at Descon Headquarters, located at 18-km Ferozepur Road, Lahore.
The share transfer books will remain closed from October 13 to October 20.
Share transfers received by Corplink (Pvt) Limited, Lahore, by October 12 will be eligible for consideration for the proposed dividend.
Profitability Remains the Key Challenge
Descon Oxychem’s FY26 results highlight a difficult year, with declining sales, sharply lower gross and operating profits and a substantial rise in finance costs.
While the company has maintained its dividend pattern, the payout comes against a much weaker earnings base and has contributed to pressure on shareholders’ equity.
The key challenge going forward will be restoring sales growth and margins while managing borrowing costs and preserving sufficient liquidity.