Qudsia Bano

Century Paper and Board Mills Limited recently released its financial results for the three and nine-month periods ending March 31, 2023, showcasing mixed results amid challenges.

Nine-month accounts analysis

Century Paper and Board Mills demonstrated solid growth in sales during the nine-month period of FY23, with revenue amounting to Rs38.26 billion, representing a notable 34% year-on-year (YoY) growth compared to the same period last year when sales stood at Rs28.48 billion. The company's ability to achieve growth can be attributed to increased market demand and effective sales strategies. However, the gross profit for the nine-month period declined by 11%, reaching Rs3.34 billion. Despite the decline, Century Paper and Board Mills maintained healthy profit margins, indicating effective cost management and pricing strategies amid potential industry challenges. Operating profit followed a similar trend, with a 13% decline from Rs2.98 billion in 9MFY22 to Rs2.59 billion in 9MFY23.

This decline may be attributed to various factors, including increased operating expenses, potential supply chain disruptions or pricing pressures. Profit-before-tax significantly decreased 57% to Rs1.10 billion. This decline reflects the challenges faced by the paper and board maker during the nine-month period, such as increased costs or unfavourable market conditions. The after-tax profit for the nine months stood at Rs738 million, indicating a substantial YoY decline of 59%. This decline in profitability further highlights the challenges encountered by the company during this period. Earnings per share (EPS) for the nine-month period amounted to Rs3.31, down by 59% compared to Rs8.04 in the same period last year. The decline in EPS suggests a decrease in profitability per share, impacting the company's ability to create value for its shareholders.

During the three months ending March 31, 2023, Century Paper and Board Mills faced a mixed financial performance. The company recorded sales of Rs13.34 billion for the quarter, indicating a growth of 26% compared to the corresponding period of FY22. This growth in sales reflects the company's ability to capitalise on market opportunities and expand its customer base. However, the gross profit for the quarter witnessed a modest increase of 10%, reaching Rs1.61 billion. This increase suggests the company's ability to manage production costs and maintain profit margins during this quarter. Operating profit exhibited a more positive trend, with a 13% increase from Rs1.19 billion in 3MFY22 to Rs1.34 billion in 3MFY23.

This improvement can be attributed to the company's operational efficiency and cost management efforts during the quarter. Profit-before-tax experienced a decline of 18%, amounting to Rs832 million. This decline may be a result of various factors, including increased operating expenses or changes in market dynamics. After-tax profit for the quarter stood at Rs547 million, reflecting a YoY decline of 23%. This decrease in profitability suggests potential challenges faced by the company during this particular period. EPS for the quarter amounted to Rs2.45, down by 23% compared to Rs3.19 in 3MFY22. This decline indicates a lower profitability per share during this quarter.

The gross profit margin measures the percentage of revenue retained after deducting the cost of goods sold. Century Paper and Board Mills experienced fluctuations in its gross profit margin over the years. In FY22, the gross profit margin was 12.75% compared to the previous year's margin of 19.87%. This decline may indicate challenges in managing production costs or potential pricing pressures.

Net profit margin (%)

The net profit margin indicates the percentage of revenue converted into net profit after deducting all expenses. Century Paper and Board Mills demonstrated a declining trend in net profit margin over the years. In FY22, the net profit margin was 5.67%, down from 10.33% in FY21. The decrease may be attributed to various factors such as increased operating expenses, changes in market conditions, or reduced profitability.

EPS growth (%)

The EPS growth reflects the percentage change in earnings per share over time, indicating the company's ability to generate profits and distribute them among shareholders. Century Paper and Board Mills experienced significant fluctuations in EPS growth. In FY22, the EPS growth was negative at -25.29%, following strong growth of 40.97% the previous year. The negative growth may be due to challenges in maintaining profitability or unfavourable market conditions.

PEG (price/earnings to growth) ratio

The PEG ratio assesses the relationship between a company's price-to-earnings ratio and its EPS growth rate, providing insights into the company's valuation relative to its growth potential. The paper and board maker's PEG ratio also showed fluctuations over the years. In FY22, the PEG ratio was -0.22, indicating a potentially undervalued stock relative to its EPS growth rate. However, negative PEG ratios may suggest caution or other factors influencing the valuation.

About the company

Century Paper and Board Mills was incorporated in Pakistan as a public limited company on August 2, 1984 under the now repealed Companies Ordinance, 1984. The company is engaged in manufacturing and marketing of paper, board and related products.

Credit: INP-WealthPk