Security Papers earnings fall sharply in FY26 by 40%.

Security Papers Limited’s profit after tax declined 40.5 percent to Rs907.16 million for the year ended June 30, 2026, compared with Rs1.52 billion in the previous year, reflecting softer demand and higher costs.

Basic and diluted earnings per share (EPS) stood at Rs15.31 against Rs25.72 a year earlier. Directors recommended a final cash dividend of Rs9.00 per share, equivalent to 90 percent.

Top-Line Softness and Cost Pressure

Sales revenue decreased 7 percent to Rs7.31 billion. Gross profit contracted 28 percent to Rs1.59 billion as the cost of sales rose slightly while revenue fell.

Other income declined to Rs688 million from Rs916 million in the prior year. Profit before taxation dropped to Rs1.60 billion from Rs2.41 billion. While the taxation charge was lower in absolute terms, the effective tax rate remained elevated.

Strong Capital Expenditure Drives Asset Growth

The company invested heavily in property, plant, and equipment, which more than doubled to Rs4.47 billion over the fiscal year. Long-term investments declined, while short-term investments remained stable.

Trade debts reduced substantially, improving the overall working-capital position. Total equity increased to Rs9.38 billion, supported by general reserves rising after transfers from unappropriated profit.

Cash Generation Remains Solid

Cash generated from operations improved to Rs2.15 billion. After taxes and other operational payments, net operating cash flow stood at Rs1.24 billion. However, significant outflows toward plant acquisition and strategic investments resulted in lower closing cash balances.

Shareholder Returns and Governance Note

Despite the earnings decline, the board maintained a robust dividend payout of Rs9 per share. Shareholder entitlement will go to members registered on September 18, 2026, with share transfer books closed from September 19 to 25, 2026.

The annual general meeting (AGM) will take place on September 25, 2026, at the company’s Karachi premises. Separately, Company Secretary and Chief Legal Officer Yasir Ali Quraishi will step down from his position effective August 12, 2026.

The full-year results highlight a transitional period of heavy capacity investment alongside softer operational performance, even as the company maintains its high dividend payout policy.