Duc Giang Chemicals Group JSC (HoSE: DGC) posted revenue of approximately VND7,009 billion ($271.63 million) in the first nine months of the year, down 17.7% year-on-year, according to the company's consolidated financial statements for Q3.

Net profit reached VND1,369 billion ($53.05 million), a decline of 45.9% from the same period in 2025. The results represented 69.4% of DGC's full-year revenue target and 85.6% of its profit target.

In Q3 alone, net revenue stood at approximately VND2,469 billion ($95.68 million), down 12.3% year-on-year, while net profit fell 37% to nearly VND507 billion ($19.65 million). However, compared with Q2, revenue increased by approximately 2.3% and net profit rose nearly 15%.

Gross profit margin also improved to 20.5% from 18.9% in Q2, although it remained around 10.6 percentage points below Q3/2025.

The improvement masked a clear divergence between the company's two markets. Domestic revenue in Q3 fell nearly 51% year on year, while revenue from overseas markets increased by almost 4%.

According to the company's explanation, Mining Site 25 remained temporarily suspended to facilitate an investigation. DGC was therefore forced to use imported and externally sourced apatite ore, pushing up production costs for yellow phosphorus. Prices of other inputs, including sulphur, electricity, coke and ammonia, also rose sharply.

Apatite ore is a key raw material in DGC's production chain for phosphorus, phosphoric acid and fertilisers. Disruptions to its own mining operations have forced the company to seek alternative supplies, eroding the cost advantages of its integrated production chain.

The Q3 results therefore reflected a recovery from the previous quarter's low base, while the pressures that have weighed on profitability remained in place.

Domestic fertiliser market remains under pressure

In the first nine months of the year, DGC's domestic revenue reached approximately VND1,143 billion ($44.3 million), down more than 58% from the same period in 2025. Third-quarter domestic revenue, calculated from the nine-month financial statements and the reviewed first-half report, was approximately VND408 billion ($15.8 million), down nearly 51% from VND831 billion a year earlier.

According to a report by Rong Viet Securities, DGC's fertiliser products were primarily sold in the domestic market during 2019-2024. This historical sales structure highlights the importance of domestic fertiliser demand to the company's business.

Based on its 2025 annual report, updated following the audit, DGC's phosphorus-based fertiliser products, including MAP, DAP, phosphate fertilisers and NPK, accounted for nearly 24% of consolidated revenue. MAP and DAP were the largest contributors, while NPK represented only around 1%.

The weaker performance of the domestic fertiliser market therefore partly explains the sharp decline in DGC's domestic revenue. Third-quarter 2026 financial reports from several fertiliser producers, particularly those involved in phosphate-based products, point to a similar trend.

In its explanation accompanying its Q3/2026 financial statements, Ninh Binh Phosphate Fertiliser JSC (HNX: NFC) said sales volumes of phosphate fertiliser fell nearly 47%, while NPK sales declined almost 17% year-on-year.

NFC attributed the decline to low prices for several agricultural commodities and rising input costs, which had prompted some farmers to reduce fertiliser use or cut back on additional applications. The company also cited export difficulties, suggesting that the volume decline reflected pressure in both domestic and overseas markets.

At Lam Thao Super Phosphate and Chemicals JSC (HNX: LAS), fertiliser sales volume in Q3 fell by nearly 21,000 tons, equivalent to approximately 20.2% year-on-year. The company said fluctuations in raw material prices had made distributors more cautious about placing orders.

Developments at NFC and LAS highlight weaker demand at some phosphate-based fertiliser producers, a product segment that contributes significantly to DGC's domestic revenue. Raw material shortages are another factor to consider when assessing the decline in domestic fertiliser sales.

Vietnam Apatite Company said several mining sites were still facing land clearance issues. The company added that three ore processing plants had been forced to suspend operations since June due to a shortage of Grade III ore.

DGC subsidiary Duc Giang Lao Cai Chemicals Co Ltd also said apatite supplies remained insufficient to meet demand from its phosphoric acid and fertiliser production lines.

Nevertheless, Duc Giang Lao Cai remains a major contributor to its parent company's profits. Since the beginning of 2026, DGC's standalone financial statements have recorded VND3,297 billion ($127.77 million) in profit distributed from the subsidiary, 2.45 times the amount recorded in the same period last year. This indicates that chemical production and business activities, particularly phosphoric acid, continue to show positive signs.

Chemical exports maintain momentum

DGC's overseas revenue reached approximately VND5,866 billion ($227.33 million) in the first nine months, up 1.2% year-on-year. In Q3 alone, overseas revenue was estimated at VND2,062 billion ($79.9 million), an increase of nearly 4%.

According to DGC's 2025 annual report, while fertiliser products are the main contributors to domestic revenue, chemical products account for the bulk of export sales. Yellow phosphorus (P4) contributes nearly 49% of consolidated revenue, while 85% phosphoric acid accounts for around 11%.

Rong Viet Securities said Japan, Taiwan and South Korea accounted for approximately 65% of DGC's P4 revenue in 2024. In these markets, P4 is mainly used to produce high-purity phosphoric acid for the semiconductor industry. Meanwhile, products exported to India are used in fertilisers, crop protection chemicals and industrial chemicals.

In Japan, demand for phosphorus chemicals used in semiconductor manufacturing continues to show positive signs. In a report released on August 12 covering its April-June 2026 operations, Rasa Industries said revenue from conventional phosphorus products declined, while sales of high-purity products for semiconductor manufacturing, including phosphoric acid, increased, supported by positive domestic sales and sustained export demand.

On September 30, Rasa announced plans to invest approximately NT$3.8 billion in building its second high-purity phosphoric acid plant in Taichung, with completion expected in fiscal 2028. The company said demand for higher production volumes of the chemical in Taiwan was becoming increasingly evident amid the expansion of artificial intelligence and data centres.

Rasa's investment decision reflects expectations of medium- and long-term demand growth in a key export market for DGC. This provides a positive signal for the outlook for phosphorus chemicals used in semiconductor manufacturing, although the extent to which DGC could benefit remains uncertain.

Apatite shortages continue to drive up DGC's input costs, while chemical demand in several key export markets is showing signs of strength. For investors, DGC's ability to maintain production, sustain overseas revenue growth and improve profits from the previous quarter represents a notable development following the senior management upheaval in March.

However, a sustainable recovery will depend on stabilizing raw material supplies and improving profit margins. From an industry perspective, developments in Lao Cai province indicate that several other mining sites continue to face obstacles related to land clearance, waste dumps and administrative procedures, while some have been suspended pending investigations.

As a result, efforts to restore and stabilise apatite supplies are likely to face considerable challenges in the near term.