JCR-VIS Reaffirms Entity Ratings of Century Paper and Board Mills Limited

Karachi, December 11, 2017 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Century Paper and Board Mills Limited (CPBM) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the rating is ‘Stable’. The previous rating action was announced on May 23, 2016. Ratings assigned to CPBM take into account the volumetric growth as well as recuperation in margins; which led to improvement in the financial performance of the company. Furthermore, rating incorporates strong sponsors’ support that the company garners with majority shareholding resting with Lakson Group of Companies.

CPBM enjoys a leadership position in Paper and Paperboard market with Coated Packing Board as its flagship product. Ratings also incorporate the imposition of anti-dumping duty on Chinese imports which may serve to alleviate risk of margin reduction. Due to shift in industry dynamics, price of Chinese imports related to paperboard increased which improved competitiveness of CPBM’s products. This led the management to increase production levels.

On the back of volumetric growth, favourable adjustment in product price as well as continuous supply of energy, CPBM posted improved profitability. Resultantly, cash flows in relation to outstanding liabilities improved on a timeline basis. Going forward, CPBM expects volumetric growth in the coming years through the set-up of a new PM-8 plant which will increase the existing capacity by about 55% and may translate into higher cash flows. Capitalization levels of the Company are currently adequate. However, in the wake of payment of preference dividend and increase in working capital requirements resulted in higher short-term borrowing which have pushed leverage indicators slightly upward.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

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