Lahore: Descon Oxychem Limited reported a substantial decrease in profitability for the fiscal year ending June 30, 2026, as outlined in the Directors' Report released on September 29, 2026. The company faced heightened financial challenges due to increased energy and raw material costs, driven by geopolitical tensions in the Middle East.
The Pakistani economy showed signs of resilience with a GDP growth of 3.70% for FY 2026, marking its strongest performance in four years. Nevertheless, underlying vulnerabilities persisted, as evidenced by a widening trade deficit and re-emergent inflation tied to escalating oil prices. These global economic disruptions, particularly in energy supply chains, have had a profound impact on Descon Oxychem Limited's operations, given its reliance on Petrochem and RLNG prices for the production of hydrogen peroxide.
Descon Oxychem Limited maintained full operational capacity throughout the year, aside from scheduled maintenance shutdowns. The company managed to convert its production output into cash efficiently through effective sales strategies and disciplined management of working capital. Nonetheless, the first half of the year saw intense pricing pressures, and the latter half was marked by significantly elevated input costs.
According to information available from the Pakistan Stock Exchange (PSX), the company's sales fell by 15%, amounting to PKR 5,113.97 million, compared to PKR 5,998.85 million in the previous year. Gross profit experienced a significant move, declining by 45% to PKR 983.26 million. The profit from operations decreased by 64%, resulting in PKR 474.36 million, while the profit before levy and taxation fell by 65% to PKR 455.60 million. The profit after tax saw a big move of a 54% reduction, totaling PKR 393.62 million.
The company incurred finance costs of PKR 65 million, which rose from PKR 10 million in FY 2025, due to increased short-term financing utilized to meet the heightened working capital requirements. This increase in finance costs represented a very large or significant move of 550%.
Despite these challenges, Descon Oxychem Limited remained profitable, reflecting the resilience of its business model and operational efficiency. The company's earnings per share (EPS) decreased from 4.91 to 2.25.
In response to the demanding business environment, Descon Oxychem Limited effectively managed its liquidity needs while continuing to support its operational and strategic goals. The company focused on optimizing running finance facilities to meet increased working capital needs, aiming to improve operating cash flows through disciplined management, efficient resource allocation, and ongoing operational improvements.