Duc Giang Chemicals CEO reassures shareholders, accepts profit erosion pressure

CEO of Duc Giang Chemicals Group JSC (HoSE: DGC) Luu Bach Dat admitted shortcomings in the company’s legal compliance following the arrest of senior executives and pledged to close regulatory loopholes to prevent similar issues in the future.

“This is a major lesson for the company,” Dat said at an extraordinary general meeting 2026 on Friday.

The meeting was convened to restructure the company’s governance apparatus and ensure business continuity after police in March detained chairman Dao Huu Huyen, his son and several executives as part of an investigation into alleged environmental, resource and accounting violations.

Responding to shareholders’ concern over financial liabilities tied to the alleged legal violations, the company said responsibility currently rests mainly with the individuals involved and their families, adding that no corporate resources have been used to address the matter pending official conclusions from investigators.

For audit progress and the possibility of lifting the stock from restricted trading status, DGC said it is working with multiple audit firms. Following shareholder approval for the appointment of an auditor, DGC will move ahead as soon as possible, though the timeline will depend on the audit process and the auditor’s opinion on the 2025 financial statements.

However, representatives of DGC said they could not commit to a specific timeline to shareholders.

At the meeting, all three nominees - Dao Huu Kha, Nguyen Quoc Trung and Pham Duy Tung - were elected as new board members. Dao Huu Kha is the younger brother of former chairman Dao Huu Huyen.

Dat said the newly elected board members have each spent 15-20 years at DGC and that the new leadership team would continue the previous management’s strategy of increasing the value of chemical products.

“We have worked together for years and remain fully aligned in continuing the direction set by the former leadership team. Shareholders can rest assured,” Dat said.

Accepting “profit erosion”

Amid the suspension of operations at the 25 and 19B mining sites, DGC reported weaker Q1/2026 results, with revenue falling 24% year-on-year to VND2.13 trillion ($80.96 million) and net profit dropping 48.6% to VND430 billion ($16.34 million).

Dat said the company still has sufficient raw materials for production, though it has stepped up external purchases and imports of ore from Pakistan and Egypt to offset domestic shortages following the suspension of the two mining sites. The company is currently in talks with five suppliers and will source from those offering the lowest prices.

“There is no shortage of ore, but raw material costs have increased and that is something we have to accept,” the executives said.

DGC also acknowledged that importing raw materials at higher prices would directly weigh on profit. With global sulfur prices rising amid tensions involving Iran, production costs for apatite and chemical products remain under pressure.

Against the backdrop, DGC expects to raise selling prices through technological upgrades and higher-value products. The company’s main export market is currently Japan, alongside South Korea and India.

Dat said the company’s key strength lies in its long-tenured workforce, with many employees having been with the group for up to 20 years. This is seen as a foundation for developing higher value-added products derived from apatite ore.

“The core strategy of Duc Giang remains the development of high value-added chemical products. Our R&D teams and management are continuing to execute this direction,” the CEO added.

On project progress, Dat said DGC’s Nghi Son chemical complex project in Thanh Hoa province, central Vietnam, is expected to begin trial operations in late Q3 or early Q4, with commercial production potentially starting in Q4/2026.

For the bauxite project in the central province of Lam Dong, the company said it will be reviewed and reassessed by the newly formed board, and urged shareholders to continue discussions at the upcoming AGM.

Meanwhile, on its real estate project in Hanoi, the company stressed that this is merely the development of land bank following the relocation of its Hanoi plant in line with regulations, and not a strategic shift into the property sector.

On the Ho Chi Minh Stock Exchange (HoSE), DGC shares closed Friday at VND52,200 ($1.98) apiece.