Descon Oxychem declares Rs2 dividend despite 45% profit fall

February 25, 2026 (MLN): Descon Oxychem Limited (PSX:DOL) reported a net profit of Rs274.6m for the half year ended December 31, 2025, a 45% decline from the Rs496m profit recorded in the same period last year.

The company's earnings per share decreased to Rs1.57 from Rs2.83 in the corresponding period of the previous year while dividend was declared at Rs2 per share.

The chemical manufacturer's sales declined 22% year-on-year to Rs2.49bn from Rs3.20bn.

Cost of sales decreased 10% to Rs1.95bn from Rs2.17bn, resulting in a gross profit of Rs545m, down 47% from Rs1.02bn in the prior period.

The company operated in an increasingly difficult market environment driven by intensified price competition from foreign suppliers, particularly Bangladeshi manufacturers.

The removal of anti-dumping duties on hydrogen peroxide imports from Bangladesh by the National Tariff Commission, combined with the continuation of duty exemptions under the Export Facilitation Scheme, significantly strengthened the competitive position of Bangladeshi producers in regional markets, resulting in pronounced downward pressure on selling prices.

The gross profit margin declined sharply to 21.9% from 32% in H1 FY2025, indicating severe margin compression as revenue declined faster than costs.

The net profit margin stood at 11% compared to 15.5% in the same period last year, reflecting the company's deteriorated profitability.

Administrative expenses increased 19% to Rs134.9m from Rs113.5m, while distribution and selling costs rose 55% to Rs143.7m from Rs92.7m, reflecting higher commercial expenses despite lower sales volumes.

Other income increased 99% to Rs99.2m from Rs49.9m, providing some support to the bottom line.

Other operating expenses declined 73% to Rs23.1m from Rs84.1m.

Operating profit declined 56% to Rs342.5m from Rs783.6m in H1 FY2025, reflecting the impact of lower sales, compressed margins, and higher operating expenses.

Finance costs surged 2.8 times to Rs18.4m from Rs4.9m.

Profit before taxation stood at Rs324m, representing a 58% decline from Rs778.7m in the corresponding period last year.

The company recorded a taxation expense of Rs49.5m, down 82% from Rs282.7m, with the significantly lower tax charge providing some relief but insufficient to offset the dramatic decline in pre-tax profit.

Furthermore, the company is continuously trying to strengthen domestic demand alignment and support price stability along with other local players by reducing import volumes of hydrogen peroxide.

It is actively engaged with relevant government forums to reinforce regulatory compliance and discourage misuse of schemes such as the EFS.

Following the Heimtextil exhibition, market feedback indicates mixed sentiment. The towel segment is expected to remain subdued, whereas home textiles are projected to show gradual improvement.

In addition to protecting domestic market share the company has strategically focussed on export markets including the Arabian region, Africa, and the Far East. 

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