The oldest food and beverage production and processing company in Pakistan, Mitchell's Fruit Farms Limited was established back in 1933 by Frances J. Mitchell. Since its days of inception Mitchell's Fruit Farms Ltd has come a long way to become one of the leading manufacturers and exporters of jams, jellies, condiments and confectionery in Pakistan.
Starting out pre-partition as Indian Mildura Fruit Farms Ltd, Mitchell's today is a household name in Pakistan and has a product line that caters to a broad variety of tastes and needs. The firm has its own orchards, which ensures the procurement of the best possible fresh fruit all year round, making their products the choice of millions of consumers across the country.
One of the first food production and processing companies in Pakistan to get an ISO 9001 accreditation, Mitchell's was also one of the first to engage in Corporate Social Responsibility initiatives, working for educational development in Okara and Renala Khurd.
Currently, Mitchell's Fruit Farms Ltd is engaged in the manufacture of a variety of confectionery and grocery items including sauces, pickles, jams, squashes and canned fruits and vegetables, and continues to be an innovator and market leader in the local food industry.
FINANCIAL HIGHLIGHTS The financial records at the close of the 2nd quarter ending March 31, 2012, opened on an optimistic note for MFFL, with the firm managing to record a top-line growth of 31 percent over the same period of last year. With sales of Rs 965 million at the end of the half yearly period, Mitchell's has gone from strength to strength on the back of ongoing investments in marketing and continued interest from abroad.
Over the last few years, Mitchell's has been engaged in aggressive re-vamping of both their product line and manufacturing capacities, allowing for rapid growth in spite of the ailing state of Pakistan's economy. This can be seen in the Company's net sales, which grew by almost 30 percent over last year reaching Rs 1,794 million at the close of FY11.
Compared to the 1st quarter, MFFL was also able to bring down its cost of sales to Rs 340 million, mainly as a result of management policies that have been concentrating on optimisation of costs and operating margins. As a result the Company's profitability has been maintained despite witnessing a slight decline in net sales over the last quarter.
Overall, increased investments into capacity building and the improvement of the firm's supply chain-as indicated by increasing capital expenditures-have been paying out well in terms of improvements on the firm's margins which have maintained a healthy growth over the last three years.
OPERATIONAL HIGHLIGHTS Not only has the firm managed to sustain a positive growth over the last few years, but also the figures show that continued efforts at improving operational efficiencies and a focus on capturing new markets has played out well for the firm.
Capital expenditures into the upgradation and modernisation of plant and equipment were carried out throughout the year. These continuous improvements in plant and machinery boosted the firm's manufacturing efficiencies further. As a result of this, total production for Groceries went up by nearly 15 percent over last year to reach 1.2 million cartons; whereas the production of confectionery went up by 12 percent to 395,638 cartons.
The Company's exports-mainly to UK, USA, and Middle East-have also managed to grow astronomically at the end of this half year, going up by 40 percent over the same period of last year. With export sales totalling Rs 149 million at the end of FY11, MFFL is presented with a great opportunity in the long term to capitalise on its growing market share abroad.
FUTURE OUTLOOK Over the last year the food and beverages sector has been the sole ray of sunshine for Pakistan's large scale manufacturing, being amongst the few sectors that have shown actual and measurable growth. At the close of the 2nd quarter, things remain positive for Mitchell's Fruit Farms Ltd. However, in the coming months the prices of raw and packaging materials are expected to rise further under the current circumstances, which will make it necessary for the Company to raise the prices of most of their products. Although it is somewhat expected to adversely affect the purchasing power of the customers, Mitchell's brand equity is likely to remain strong.
The massive and incremental explosion in food consumption amongst Pakistani households has boded well for almost all food producing and processing industrial giants, and in the future, the same trend is likely to benefit MMFL in the long run.
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MFFL- Key indicators
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2009 2010 2011
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Net sales Rs mn 1,255 1,377 1,794
Gross profit Rs mn 235 303 394
Other revenue Rs mn 72 107 147
PAT Rs mn 14 46 73
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Profitability Ratios
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GP margin % 19% 22% 22%
NP margin % 1% 3% 4%
ROA % 2% 7% 10%
ROE % 5% 15% 20%
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Liquidity Ratios
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Current ratio times 0.98 1.25 1.33
Equity as a % of total asset % 0.37 0.47 0.47
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Activity Ratios
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Fixed Asset Turnover times 3.81 4.40 5.40
Total Assets Turnover times 1.72 2.10 2.35
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Investment Ratios
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EPS (Rs) Rs 2.79 9.22 14.57
Dividend yield % 20 40 0
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Source: Company accounts
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Operating Results
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Rs(mn) 1QFY12 2QFY12 chg
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Gross sales 513 452 -12%
Operating Income 43 45 6%
NPAT 24 33 39%
EPS (Rs) 4.71 6.55 39%
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All information and data used are from reliable source(s) and subjected to extensive research after diligent and reasonable efforts to determine the soundness of the source(s). This analysis is not for the benefit of or discredit to any person, scrip or tradable instrument. The content(s) of this analysis shall not be construed as an advice or recommendation to trade. No relationship of client will be created between Business Recorder and user of this information. Professional advice must be taken by the reader before making investment/trading decisions. BR disclaims any liability for investment(s) made or liability accrued on basis of this analysis. The content(s) including all opinion(s), statement(s) and information are subject to change without prior notice and/or intimation.
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