⚡ Flash Summary

Century Paper & Board Mills Limited’s annual report for the year ended June 30, 2025, paints a mixed picture. The company experienced a decline in sales volume and adjusted selling prices leading to reduced profitability. It faced challenges including competition from cheaper imports and operational difficulties, necessitating a targeted production strategy focused on cost optimization. Despite these headwinds, Century Paper maintained its commitment to quality, sustainability, and community engagement, and the company’s stable credit rating was confirmed at ‘AA-‘ for Long-Term and ‘A-1’ for Short-Term.

📌 Key Takeaways

• 📉 Sales volume decreased by 8% year-over-year, with 170,187 MT in 2025 versus 184,908 MT in 2024.
• 📉 Overall selling prices declined by 4% compared to the previous year.
• 📉 Net sales decreased by 11% year-over-year to Rs 37,281 million.
• 📉 Gross profit decreased significantly from Rs 4,066 million to Rs 2,664 million.
• 📉 The gross profit margin narrowed to 7.14% from 9.68%.
• ⚠️ One-off tax adjustment of Rs 349 million relating to minimum taxes for 2013-2017 following an adverse Supreme Court decision impacted profitability.
• ❗ Net loss after tax was Rs 345 million, compared to a net profit of Rs 524 million in the prior year.
• ⚠️ Negative earnings per share (EPS) of Rs (0.86) compared to positive EPS of Rs 1.30 in the prior year.
• 📊 Contribution to the National Exchequer increased slightly to Rs 8,734 million.
• 👍 The company completed BMR projects totaling Rs 601 million, aiming to improve reliability and cost competitiveness.
• ✅ Maintained stable credit ratings of AA- (Long Term) and A-1 (Short Term) from VIS Credit Rating Company Limited.
• 🌱 Demonstrated commitment to sustainability initiatives through participation in the Carbon Disclosure Project (CDP).
• 🤝 Continued commitment to ethical labor practices and community engagement programs.

🎯 Investment Thesis

I recommend a HOLD rating for Century Paper. Despite its efforts at digital transformation and commitment to sustainability, the company faces revenue headwinds, resulting in net loss after tax. Also, the company has few environmental compliance procedures in place. The stock may be appropriate for existing investors with a long-term view, but new investors should await a clear turnaround in financial performance. Price target of 31.00.