Company Name: Century Paper & Board Mills Ltd
Ticker: CEPB
Reporting period: year ended 30 June 2026 (FY2026). Reporting basis: audited company-only / unconsolidated financial results, presented in Pakistani rupees thousands except per-share data.
Verdict
Century Paper & Board Mills finished FY2026 with a much smaller annual loss and a forceful implied fourth-quarter recovery. Net turnover rose modestly, gross margin remained below the prior year for the full twelve months, but lower finance cost and higher other income lifted profit before income tax and levy to PKR 514.4 million from PKR 30.0 million. The annual loss narrowed to PKR 58.3 million from PKR 345.4 million. The recovery is not yet clean: operating cash outflow nearly doubled, inventory and receivables absorbed more capital, borrowings increased, and the board declared no cash dividend or bonus shares. The result therefore reads as an earnings repair with a still-stretched funding profile, not a fully cash-backed turnaround. Audited FY2026 filing
What was officially announced
The board approved the audited financial statements on 12 August 2026 for the year ended 30 June 2026. PSX posted the financial-result announcement on 13 August 2026. The filing contains the statement of profit or loss, statement of financial position, changes in equity and cash flows, and confirms that cash dividend and bonus shares are nil. The company has a June year-end, and PSX identifies its financial data as unconsolidated. PSX company page
The audited annual release is a company-only result. It does not provide segment accounts, annual production tonnage, product-level revenue, customer concentration or a separate fourth-quarter income statement. Where this analysis discusses the June quarter, the figures are explicitly derived by subtracting the officially reported nine months to March 2026 from the audited twelve months to June 2026. That is an AlphaGen calculation, not a separately presented company quarter. Nine-month report
Full-year scorecard
Net turnover increased 3.8% to PKR 38.70 billion from PKR 37.28 billion. Cost of sales rose faster, by 4.4% to PKR 36.15 billion, so gross profit slipped 4.1% to PKR 2.55 billion. Gross margin contracted to 6.60% from 7.14%. The economics are straightforward: the company sold more in value terms, but incremental cost consumed more than the incremental revenue, leaving less gross profit despite a larger top line. Audited FY2026 filing
Operating profit nevertheless improved 3.7% to PKR 1.74 billion. General and administrative expense rose 6.6% to PKR 1.12 billion, while selling and distribution expense fell 8.3% to PKR 293.9 million. Other operating expense more than doubled to PKR 87.4 million, but other income jumped 61.3% to PKR 690.3 million. That PKR 262.3 million increase in other income more than offset the PKR 110.5 million decline in gross profit and the increase in administrative and other operating costs. This makes other income an important part of the annual earnings bridge rather than a peripheral line. Audited FY2026 filing
Finance cost fell 25.7% to PKR 1.22 billion from PKR 1.65 billion, releasing PKR 423.1 million before tax. Profit before income tax and levy consequently rose to PKR 514.4 million from PKR 30.0 million. After a PKR 380.6 million levy and PKR 192.1 million taxation charge, the company still recorded a PKR 58.3 million loss. The previous year included a PKR 439.6 million levy and a PKR 64.2 million tax credit, producing a PKR 345.4 million loss. Basic and diluted loss per share narrowed to PKR 0.15 from PKR 0.86. Audited FY2026 filing
Current versus prior: the key comparisons
Net turnover — FY2026 PKR 38.70bn | FY2025 PKR 37.28bn | change +3.8% | interpretation: modest value growth, but not enough by itself to expand gross profit.
Gross profit — FY2026 PKR 2.55bn | FY2025 PKR 2.66bn | change -4.1% | interpretation: cost of sales grew faster than revenue and compressed gross margin by about 54 basis points.
Operating profit — FY2026 PKR 1.74bn | FY2025 PKR 1.68bn | change +3.7% | interpretation: higher other income and lower selling/distribution expense outweighed weaker gross profit.
Finance cost — FY2026 PKR 1.22bn | FY2025 PKR 1.65bn | change -25.7% | interpretation: the annual interest burden eased materially, creating most of the improvement below operating profit.
Loss after tax — FY2026 PKR 58.3m | FY2025 PKR 345.4m | loss narrowed 83.1% | interpretation: pre-tax repair was substantial, but levy and tax charges prevented a full-year profit.
Net operating cash flow — FY2026 negative PKR 940.3m | FY2025 negative PKR 476.0m | outflow widened PKR 464.3m | interpretation: accounting improvement did not translate into stronger cash conversion.
The implied fourth quarter changed the year
Subtracting the nine-month results from the audited annual statements gives implied Q4 turnover of PKR 8.76 billion versus PKR 8.30 billion a year earlier, growth of 5.5%. Implied gross profit was PKR 779.7 million versus PKR 480.5 million, up 62.3%, and implied gross margin expanded to 8.9% from 5.8%. This is the clearest evidence that the late-year operating picture was stronger than the full-year margin comparison suggests. Nine-month report
The same calculation gives implied Q4 operating profit of PKR 787.9 million, more than three times the prior-year PKR 222.7 million. Other income was the largest swing: implied Q4 other income rose to PKR 441.4 million from PKR 89.5 million. Finance cost, however, increased to an implied PKR 364.1 million from PKR 330.9 million. The quarter therefore combined better gross economics and a large non-core income contribution with renewed financing pressure. Audited FY2026 filing
Implied Q4 profit after tax was PKR 277.3 million, reversing a PKR 415.2 million loss in the prior-year quarter. This quarter closed most of the PKR 335.6 million loss accumulated through March. Because the annual filing does not disclose the composition of Q4 other income or product volumes, it would be unsafe to treat the entire late-year uplift as recurring. The forthcoming annual report and notes should clarify whether investment income, disposal gains, exchange effects, grants or other non-operating items drove the increase. Audited FY2026 filing
Operations and product mix through March
Management reported nine-month production of 135,897 metric tons, up 8.9%, and sales volume of 145,005 metric tons, up 11.1%. Third-quarter production rose to 44,720 tons from 39,195 tons, while quarterly sales volume increased to 49,759 tons from 42,528 tons. The Coated Duplex Machine, PM-7, operated at higher utilization; PM-4 utilization also improved after a modified product mix. Paper products and corrugated-box volumes were broadly unchanged. Management said higher plant utilization improved energy efficiency. Third-quarter report
The March-quarter gross margin rose to 7.7% from 4.2% a year earlier. Management attributed the improvement to a better sales mix and lower raw-material and fuel costs. Those facts help explain the improving trajectory before Q4, but they do not establish the precise cause of the June-quarter margin jump because the annual result announcement contains no Q4 operational narrative. The defensible inference is that the second-half mix and cost environment improved; the exact Q4 contribution from volume, price, input cost and product mix remains undisclosed. Third-quarter report
Balance sheet: more working capital, more funding
Total assets increased 11.2% to PKR 33.25 billion. Stock-in-trade rose 35.8% to PKR 8.86 billion, trade debtors increased 10.7% to PKR 5.95 billion and stores and spares increased 5.6% to PKR 3.97 billion. Tax refunds due from government more than doubled to PKR 1.43 billion. Together, these balances show substantially more cash tied up in inventory, customers and recoverable taxes. Cash and bank balances rose only PKR 53.6 million to PKR 919.4 million. Audited FY2026 filing
Funding moved in the same direction. Short-term borrowings increased 14.2% to PKR 8.10 billion. Long-term financing, including its current portion, rose to PKR 4.39 billion from PKR 3.82 billion. Trade and other payables increased 26.7% to PKR 5.81 billion. Current liabilities reached PKR 16.10 billion, up 19.5%, while current assets rose 19.1% to PKR 22.54 billion. The nominal current-asset coverage therefore stayed near 1.4 times, but much of that coverage consists of inventory and receivables rather than cash. Audited FY2026 filing
Cash flow and capital allocation
Cash generated from operations fell 60.9% to PKR 1.01 billion. After PKR 1.06 billion of finance cost paid and PKR 879.0 million of taxes paid, net cash used in operating activities widened to PKR 940.3 million. Capital expenditure increased to PKR 716.9 million from PKR 399.9 million, producing a PKR 669.6 million investing outflow. The company raised PKR 2.00 billion of long-term financing and repaid PKR 1.50 billion, leaving financing cash inflow of PKR 333.7 million. Audited FY2026 filing
Cash and cash equivalents ended at negative PKR 7.18 billion compared with negative PKR 5.91 billion. This cash-flow definition nets short-term borrowings against cash and bank balances, so it is a useful gauge of reliance on short-term funding. With no dividend announced, capital allocation is effectively centered on funding working capital, servicing finance costs and maintaining the asset base. The absence of a payout is consistent with that liquidity picture. Audited FY2026 filing
What is recurring, and what needs proof
The more credible recurring improvements are the higher nine-month volumes, better utilization of PM-7 and PM-4, improved energy efficiency, and the full-year reduction in finance cost. These directly affect unit economics or the ongoing cost of funding. The late-year gross-margin improvement is also encouraging, though the annual filing does not disclose its detailed Q4 drivers.
The less certain component is other income. It contributed PKR 690.3 million for the year and an implied PKR 441.4 million in Q4. Until the audited annual report provides notes, readers should separate core operating improvement from this line. Levy and taxation also remain structurally important: together they absorbed PKR 572.7 million in FY2026, more than the PKR 514.4 million profit before income tax and levy.
AlphaGen model readings
Alpha QoQ Score: 88.45
TTM Performance Score: 93.26
3Y Business Perf Score: 21.14
Sector Leadership Score: 60.8293
These four readings are AlphaGen model outputs for the reporting period. They are not company-reported financial figures and should not be confused with audited revenue, profit, margins, cash flow or balance-sheet data.
Risks and what to monitor next
Management’s March review identified higher local and imported raw-material prices, fuel costs, freight rates, working-capital needs and interest rates as near-term pressures. It also said demand from food, beverage and tobacco packaging remained supportive, while the intended benefit from anti-circumvention duty on coated bleached board was delayed by litigation. These issues matter because CEPB’s profitability is thin relative to sales and its balance sheet is already carrying large inventories and short-term borrowings. Third-quarter report
The next disclosures should be read for five items: the detailed composition and recurrence of other income; June-quarter production, sales volume and product mix; inventory days and receivable collection; the path of short-term borrowing and finance cost after the Q4 increase; and the audited tax notes explaining the levy and current/deferred tax charges. A durable improvement would pair the stronger gross margin with lower working-capital absorption and positive operating cash flow. Without that cash conversion, earnings remain exposed to funding cost and balance-sheet strain.
Sources
Century Paper & Board Mills Limited — audited financial results for the year ended 30 June 2026, board-approved 12 August 2026 and posted by PSX 13 August 2026. Official PSX annual-results filing
Century Paper & Board Mills Limited — third-quarter report for the nine months ended 31 March 2026, including management’s operations review and unaudited comparatives. Official PSX nine-month report
Pakistan Stock Exchange — CEPB company profile, fiscal year-end, announcement history and reporting basis. Official PSX company page