Shezan International Limited: performance and outlook

Shezan International Limited (PSX: SHEZ) is a public limited company incorporated in Pakistan. SHEZ started its operations in 1964. The principal activity of the company is the manufacturing, trade and sale of juices, jams, pickles, ketchups etc. which are based upon or derived from fruits and vegetables.

Pattern of Shareholding

As of June 30, 2025, SHEZ has a total of 9.663 million shares outstanding which are held by 815 shareholders. Local general public has the highest stake of 45.20 percent in the company followed by its directors, CEO, their spouse and minor children collectively holding 25.26 percent shares.

Around 19.93 percent shares of the company are held by NIT & ICP and 5.11 percent by joint stock companies. Pension funds account for 2.94 percent shares while Modarabas & Mutual funds hold 1.10 percent shares of SHEZ.

The remaining ownership is divided among other categories of shareholders.

Historical Performance (2019-25)

Over the period under consideration, SHEZ’s topline plunged in 2020, 2021 and 2024. Conversely, its bottomline slid in all the years except 2021 and 2025. In fact in 2020 and 2024, the company posted operating and net losses. SHEZ’s margins rode a downhill journey until 2020 followed by a rebound in 2021.

In 2022, gross margin posted a marginal uptick, while operating and net margins marched down. In 2023, gross and operating margins showed improvement while net margin continued to tumble.

In 2024, all the margins drastically declined followed by a phenomenal recovery in 2025. Gross and operating margins registered their peak level in 2025 (see the graph of profitability ratios).

The detailed performance review of the period under consideration is given below.

In 2019, SHEZ’s topline grew by a marginal 2.68 percent year-on-year to clock in at Rs.7704.10 million.

During the year, food and beverages sector posted a year-on-year decline of 4.7 percent on account of escalating macroeconomic imbalances such as hike in the global commodity prices particularly POL products, elevated energy tariffs, Pak Rupee depreciation and high discount rate. Moreover, as huge chunk of demand was met through imports, local players couldn’t rise. In 2019, SHEZ rebranded its juices segment with a new brand name of “Happy Farms”.

The company also introduced new packing line for its 1000 ml juice segment. Among all the categories SHEZ dealt in, jams and ketchups posted the highest fall in its capacity utilization which stood at 43 percent in 2019 versus 57 percent in 2018.

Cost of sales spiked by 14.19 percent year-on-year in 2019 mainly on account of higher prices of sugar, pulp, raw and packaging materials and utilities. Gross profit shrank by 27 percent year-on-year in 2019 culminating into GP margin of 19.88 percent versus GP margin of 27.95 percent recorded in 2018.

Administrative expense inched up by 1.70 percent year-on-year in 2019, however, curtailed advertising and promotion budget allocated for the year and streamlined freight charges on account of low sales volume pushed distribution expense down by 10.53 percent year-on-year in 2019.

Net other expense slid by 84 percent year-on-year in 2019 due to lesser product spoilage, lesser provisioning as well as higher sale of scrap.

Despite keeping a check on its expense, operating profit slumped by 58.34 percent year-on-year in 2019, translating into OP margin of 2.86 percent versus OP margin of 7 percent recorded in 2018.

Finance cost magnified by 74 percent year-on-year in 2019. This was on account of higher discount rate coupled with long-term loans obtained during the year. This drove SHEZ’s gearing ratio up from 15 percent in 2018 to 23 percent n 2019. Net profit slumped by 71.36 percent year-on-year in 2019 to clock in at Rs.113.07 million with EPS of Rs.12.87 versus EPS of Rs.44.94 posted in 2018.

NP margin also ticked down from 5.26 percent in 2018 to 1.47 percent in 2019.

Followed by the skimpy sales growth of 2019, came the two years of topline slide. In 2020, SHEZ’s topline nosedived by 5 percent year-on-year to clock in at Rs.7313.04 million. The primary reason was the country-wide lockdown on account of COVID-19 which halted the economic activity.

The shutdown of HORECA industry coupled with the closure of offices, educational institutions, recreational places malls etc put a severe dent on the demand of the company’s products.

Moreover, the imposition of 5 percent FED on juices, syrups and squashes in the federal budget of 2019-20 further watered down SHEZ’s net sales in 2019. Despite lower sales volume and thinner net sales, cost of sales inched up by 0.67 percent year-on-year in 2020 due to high inflation, elevated prices of raw and packaging materials as well as spiked utility charges.

Gross profit further weakened by 28.22 percent year-on-year in 2020, translating into GP margin of 15 percent. Distribution and administrative expense measured down by 14.89 percent and 2.60 percent respectively in 2020. This was due to a drop in employee count from 303 in 2019 to 289 in 2020 coupled with rationalized advertising and promotion outlay as well as lower freight cost due to abridged volumes.

Net other expense magnified by 112.18 percent in 2020 as SHEZ did higher provisioning for ECL and made lower scrap sales during the year.

The company made operating loss of Rs.95.68 million in 2020. The performance was further smashed by a steep 203.52 percent hike in finance cost as the company obtained greater amount of short-term loans to meet working capital requirements in 2020.

SHEZ’s gearing ratio further surged to 35 percent in 2020. The company posted net loss of Rs.235.78 million in 2020 with loss per share of Rs.26.84.

In 2021, SHEZ’s topline posted another 9.96 percent drop to clock in at Rs.6584.45 million.

While export sales demonstrated encouraging growth of 45 percent year-on-year in 2020 on account of robust volumes of cooked food range particularly juice packs, bottled juices, squashes and ketchups exported mainly to the Middle East and European markets.

However, it was offset by lackluster performance in the local market on account of lockdown. Gross profit grew by 27.16 percent year-on-year in 2021 due to price rationalization and cost control measures implemented during the year. GP margin was recorded at 21.23 percent in 2021.

Distribution and administrative expense plummeted by 3.98 percent and 14.74 percent respectively in 2021.

During 2021, the company further cut down its employee count to 270 which drove down the payroll expense. Lower travelling and conveyance charges as well as curtailed advertising and promotion expense overshadowed the growth of freight charges due to increased international sales.

Net other expense slipped by 34.74 percent year-on-year in 2021 due to lower royalty fee paid to Shezan Services (Private) Limited. SHEZ was able to boast operating profit of Rs.305.23 million in 2021, translating into OP margin of 4.64 percent. Finance cost diluted by 39.94 percent year-on-year in 2021 due to lower discount rate. Gearing ratio climbed up to 37 percent in 2021.

The company recorded net profit of Rs.122.98 million in 2021, culminating into EPS of Rs.12.73 and NP margin of 1.87 percent.

SHEZ’s topline noticeably recovered in 2022, posting a rebound of 24 percent year-on-year to clock in at Rs.8169.27 million. The growth was largely led by the juice category which posted encouraging rise in its turnover.

During 2022, SHEZ’s tetrapak segment produced 29.869 million dozen products, up 18 percent year-on-year. Russa-Ukraine crisis inflated the global commodity prices. This coupled with Pak Rupee depreciation proved to be a double whammy for the company in 2022.

Hike in the prices of tetrapak paper, POL products as well as energy tariff also took its toll on the cost of the company.

However, changes in the sales mix, higher volumes and price revisions slightly pushed the GP margin up to 21.71 percent in 2022 with 26.87 percent rise in gross profit in absolute terms.

Distribution and administrative expenses spiked by 43.26 percent and 17.67 percent respectively in 2022 due to high payroll expense and freight charges.

Net other expense inched down by 18.24 percent year-on-year in 2022 on account of foreign exchange gain, gain on disposal of fixed assets as well as higher scrap sales. High operating expense impeded the growth of operating profit which ticked up by a negligible 0.12 percent in 2022 with OP margin sinking to 3.74 percent.

Finance cost plunged by 4.12 percent year-on-year in 2022 despite higher discount rate as the company paid off its external borrowings during the year. This pushed the gearing ratio down to 33 percent in 2022. Unfortunately, the topline growth couldn’t trickle down to produce a healthy bottomline in 2022.

SHEZ’s net profit slid by 35 percent year-on-year in 2022 to clock in at Rs.79.92 million with EPS of Rs.8.27 and NP margin of 0.98 percent.

In 2023, SHEZ’s topline posted year-on-year growth, however with a considerably lower momentum of 7 percent to clock in at Rs.8745.42 million. Initially, the juices segment continued to perform better, however, after the imposition of 20 percent FED on sugary fruit juices, the volume went significantly down.

Overall, the demand remained stressed due to drastic rise in inflation and shrinkage in the purchasing power of consumers. The company also increased the prices of its products to pass on the impact of cost hike which further dented the demand.

Gross profit enlarged by 17.30 percent year-on-year in 2023 with GP margin further rising to 23.80 percent. Both distribution and administrative expenses multiplied by 12.94 and 12.71 percent respectively in 2023 due to higher payroll expense and POL prices. Net other expense shrank by 72.74 percent year-on-year in 2023 due to higher realized and unrealized exchange gain and scrap sales. Operating profit picked up by 47.73 percent year-on-year in 2023 with OP margin climbing up to 5.16 percent.

Finance cost gave a severe blow to SHEZ’s bottomline as it grew by 134.62 percent year-on-year in 2023 due to unprecedented level of discount rate and elevated external borrowings. SHEZ’s gearing ratio jumped up to 39 percent in 2023. High finance cost squeezed the bottomline by 40.18 percent year-on-year in 2023 to clock in at Rs.47.81 million with EPS of Rs.4.95 and NP margin of 0.55 percent.

After two successive years of topline growth, SHEZ recorded 6.75 percent year-on-year drop in its topline which clocked in at Rs. 8154.97 million in 2024. The imposition of 20 percent FED on juices, squashes and syrups resulted in heightened prices and reduced sales volume.

Cost of sales couldn’t be reduced proportionately due to higher input prices, elevated energy tariff and inflationary pressure. This resulted in 22.58 percent thinner gross profit recorded by the company in 2024 with GP margin slipping to 19.75 percent. Shrunken sales volume resulted in 5.12 percent lower distribution expense in 2024.

Conversely, administrative expense ticked up by 1.11 percent in 2024. Net other expense was recorded at Rs.84 million in 2024, up from Rs.8.95 million in the previous year. This was due to massive decline in other income in 2024. Squeezed other income is due to high base effect as the company recorded higher exchange gain in the previous year.

Conversely, the company recorded exchange loss in 2024. SHEZ recorded operating loss of Rs.33.91 million in 2024. Finance cost grew by 18.74 percent in 2024 due to higher discount rate while outstanding borrowings were settled to a great extent in 2024. The company recorded net loss of Rs.462.81 million in 2024 with loss per share of Rs.47.89.

In 2025, SHEZ’s sales inched up by 12.60 percent to clock in at Rs.9182.59 million. Both domestic and export sales posted growth in 2025. While improved macroeconomic backdrop supported local sales, superior export sales came on the back of product diversification and penetration into new export markets. Read-to-eat foods products, ketchups and tetra-pack juices were the star products in the export market.

The company also introduced premium product lines which improved its margins. Cost cutting measures such as installation of solar power plants enabled the company to keep a check on its cost which grew by 5.90 percent in 2025. This translated into 39.83 percent stronger gross profit in 2025. GP margin also jumped up to 24.52 percent in 2025.

Distribution expense grew by 6.26 percent in 2025 due to higher salaries of sales force as well as elevated outward freight charges. Administrative expense also mounted by 12.81 percent in 2025 due to hefty payroll expense on account of revision of minimum wage rate. Workforce was squeezed from 230 employees in 2024 to 219 employees in 2025.

Net other expense surged by 10.64 percent in 2025 due to higher provisioning done for WWF, WPPF and ECL as well as royalty paid to the related party (Shezan Services Private Limited). SHEZ posted operating profit of Rs.475.90 million in 2025 versus operating loss of Rs.33.91 million recorded in 2024. OP margin clocked in at 5.18 percent in 2025.

The company was able to drive down its finance cost by 42.79 percent in 2025. This was the result of monetary easing as well as settlement of outstanding liabilities during the year. Gearing ratio fell from 47 percent in 2024 to 37 percent in 2025. SHEZ posted net profit of Rs.163.05 million in 2025 with EPS of Rs.16.87 and NP margin of 1.78 percent.

Recent Performance (9MFY26)

During the nine month of the ongoing fiscal year, SHEZ’s topline strengthened by 6.10 percent to clock in at Rs.6505.13 million. The sales growth was supported by improvement in both local and export sales which was the result of effective pricing strategies, cost control measures, strengthening distribution framework and growing global footprint.

Local sales still form the greatest chunk of the company’s sales mix, however, export sales are also gaining traction mainly on account of the company’s growing acceptance in the Middle East, Europe, North America and the United Kingdom. Cost of sales inched up by 1.18 percent in 9MFY26, resulting in 22.48 percent stronger gross profit. GP margin also mounted from 23.11 percent in 9MFY25 to 26.68 percent in 9MFY26.

Distribution and administrative expense surged by 10 percent and 19.29 percent respectively during the period in line with the growth of the company’s operations.

Net other expense multiplied by 71.22 percent in 9MFY26 primarily on the back of increased provisioning done for WWF and WPPF. SHEZ posted 68.64 percent recovery in its operating profit in 9MFY26 with OP margin clocking in at 6 percent versus OP margin of 3.78 percent posted in 9MFY25.

Finance cost tumbled by 10.23 percent in 9MFY26 despite increased borrowings. This was due to lower discount rate. Net profit for the period was recorded at Rs.138.140 million, up 4661.81 percent year-on-year. This translated into EPS of Rs.14.30 in 9MFY26 versus EPS of Rs.0.30 posted in 9MFY25. NP margin took off from 0.05 percent in 9MFY25 to 2.12 percent in 9MFY26.

Future Outlook

The company’s keen interest to boost its export is an apt strategy in the face of deteriorating purchasing power of customers in the home market. The company has significantly leveraged the international markets of Germany, Canada, Saudi Arabia and the United Kingdom.

The company plans to install solar power plant at its Lahore factory after its successful commissioning at the Karachi and Hattar production facilities. This will reduce its reliance on the grid and will also mitigate cost pressure.

Downside risk includes supply chain disruptions due to the recent floods as key inputs such as sugar, fruits and vegetables are locally sourced. To mitigate this risk, the company is entering into advance procurement arrangements with its suppliers.

Another external risk that the company faces is the ongoing geopolitical tensions which can cause supply chain disruptions, reduced demand and cost hike.