Descon Oxychem profit falls 15% in Apr-Jun

September 09, 2024 (MLN): Descon Oxychem Limited (PSX: DOL) earned a profit after tax of Rs84.62 million [EPS: Rs0.48] in the quarter ending June 2024, down 15.2% compared to a profit of Rs99.74m [EPS: Rs0.57] in the same period last year (SPLY).

Along with the result, the company announced a final cash dividend of Rs2 per share i.e. 20%.

The company's sales revenue dipped 12.2% to Rs1.35bn as compared to Rs1.54bn in SPLY.

Furthermore, the cost of sales rose 4.9%, worsening the gross profit by 45.5% to Rs284.01m in Q4 FY24.

The gross margins slumped to 21.0% as compared to 33.9% in SPLY.

"We believe lower gross margins are due to higher RLNG, electricity cost, and lower price of hydrogen peroxide," brokerage house BMA Capital noted.

During the period under review, other income slid by 48.2% to stand at Rs24.22m in Q4 FY24 as compared to Rs46.73m in SPLY. BMA Capital attributed the decline to a 75% reduction in cash balances and short-term investments.

On the expense side, the company's administrative expenses rose 10.7% from a year ago to Rs52.08m, while selling and distribution expenses rose 40.6% to Rs93.81m.

The company’s finance cost marked a decline of 48.5% and stood at Rs3.13m as compared to Rs6.08m in SPLY, likely due to decline in borrowing costs

On the tax front, the company paid a significantly lower tax worth Rs71.9m against the Rs245.55m paid in the corresponding period of last year, depicting a decrease of 70.7%.

This translates to an effective tax rate of 45.9% as compared to 71.1% in SPLY.

Amount in thousand except for EPS

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