Kenyan Packaging Firm Shri Krishana Issues Profit Warning as Borrowing Costs Rise

Shri Krishana Overseas PLC (SKL), a corrugated packaging manufacturer, has warned of a dip in profit for the financial year 2025.

In its outlook report released on Monday, September 29, the company warned that it expects earnings to fall by over 25% due to surging finance costs from new borrowings to fund its Kisaju plant.

“Full-year profits are also expected to drop by more than 25% because of the costs of the borrowing that was secured to fund the Kisaju development,” read the report in part.

“In view of the above, and pursuant to Regulation 14.5.7 of the Thirteenth Schedule of the Capital Markets (Public Offers, Listings and Disclosures) Regulations, 2023, we wish to notify investors that we expect the profits at the end of the current financial year to decline.”

Shri Krishana Expects Over 25% Profit Drop Due to Borrowing Costs

This comes after the company reported Ksh 158 million in revenue for the first six months of 2025 — a 6% drop compared to the same period last year.

The company attributed the decline in revenue to a slowdown in business activity during the period.

“We consider the drop to be normal volatility owing to seasonality of the business, and we expect to fully recover from this slight dip by the end of the year,” the company said.

Operating costs over the first six months of 2025 dropped by 9%, from Ksh 32.6 million to Ksh 29.9 million, largely driven by management’s efforts to control costs.

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Profits for the year 2025 dropped to Ksh 2 million from Ksh 6 million during the same period last year.

Shri Krishana said the decline was a result of increased finance costs incurred from borrowings sourced to fund the development of the Kisaju project.

Meanwhile, SKL’s borrowings as of June 30, 2025, stood at Ksh 113 million, up from Ksh 3.5 million as of June 30, 2024.

The company also acquired additional machinery to increase production capacity at its Industrial Area plant.

Company’s 2025 Developments

SKL said its strategic development in 2025 is progressing according to plan. The company successfully completed its listing on July 24, 2025, providing a strong platform for future growth.

Additionally, its investment in the new plant in Kisaju, Kitengela, is on track to begin the first phase of operations by the end of the year. Full production is expected by the end of the first quarter of 2026.

“Civil works are scheduled for completion by the end of November 2025,” the company added.

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SKL 2024 Financial Results

Over the four-year period ending December 31, 2024, SKL experienced impressive growth, with revenue rising 138% from Ksh 130.2 million in 2021 to Ksh 309.9 million in 2024.

However, year-on-year revenue growth sharply slowed to just 1.2% in 2024, signaling that the company’s pre-expansion production capacity had plateaued ahead of the Kisaju plant commissioning.

While operational efficiencies helped improve margins to 31.6% in 2024 and net profit rebounded to Ksh 10.2 million from a loss in 2022, SKL’s aggressive expansion was heavily debt-funded.

Total assets doubled to Ksh 297.5 million, driven by a staggering 17-fold increase in long-term loans from Ksh 4 million to Ksh 71.9 million within a year.

This surge in borrowing, while enabling growth, also led to a fivefold increase in finance costs to Ksh 21.7 million in 2024.

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