Mitchell's Fruit Farms Limited
January 29, 2013 RECORDER REPORT 0 Comments
The oldest food and beverage manufacturing company in Pakistan, Mitchell's Fruit Farms Limited was established back in 1933 by Frances J Mitchell. Since its inception Mitchell's Fruit Farms Limited 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 fruits all year around, 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.
FINANCIAL HIGHLIGHTS The outgoing year saw Mitchell's business grow despite adverse economic conditions which stagnated growth for much of the country's industry. However, like all major food producers, Mitchell's too enjoyed a healthy growth over the year as the sales volumes for the Company's popular brands geared up by as much as 15 percent, year on year.
While the firm's top line grew by a healthy five percent; the bottom line managed to expand by a much more pronounced proportion of 47 percent, hitting Rs 108 million by the year-end. This double-digit growth was largely on account of exceptionally high margins across various categories which were strengthened by improved distribution efficiencies.
Additionally, investment over the year into improved rationalisation of the product mix as well as the supply chain efficiencies allowed the firm to get into some major fighting form.
Interest from abroad remained another factor which played into Mitchell's profitability this year. The year saw the Company's export sales hit Rs 163 million over Rs 149 million recorded last year, a nine percent hike on account of interest from middle eastern markets hitting a high note.
Compared to FY11, MFFL was also able to keep a lid on its cost of sales, holding them down to Rs 1.4 billion despite inflationary pressures mainly as a result of management policies that have been concentrating on optimisation of costs and operating margins.
As a result, while the COGS grew by a small sum, as a percentage of net sales the figure actually came down by three percentage points -to 75 percent as compared to 78 percent recorded during FY11.
Hence Mitchell's profit from operations for the year 2012 grew by 20 percent year on year on account of judicious management of funds. Additionally, the firm's financial costs were driven down by 40 percent over last year, another factor which trickled down into improved margins. Consequently, the growth translated into a 48 percent hike in the firm's earnings per share (EPS), which rose to Rs 21.5 over Rs 14.5 that was recorded last year.
OPERATIONAL HIGHLIGHTS The positive financial performance recorded by the food manufacturing giant has come entirely at the hands of its management's initiatives to drive down costs and invest in modernising and automating major equipments and processes used during production.
The company has invested heavily into improving and optimising its operating efficiencies throughout FY12. Additionally, the year also saw the firm delving into human resource development endeavours which saw trainings for the staff in sales, supply chain, quality assurance and productivity. Consequently, these trainings played a pivotal role in improving the firm's overall operational performance which has been the major growth driver this year.
FUTURE OUTLOOK Over the last year, the food and beverages sector has been the sole ray of sunshine for Pakistan's manufacturing industries, being amongst the handful of sectors that have shown actual and measurable growth. However it goes without saying that the macro economic conditions might leach away the sectors profitability in the coming year.
A contributing factor will remain the prices of raw material which have already been spiralling out of control. With essential raw materials such as milk, sugar and fruit becoming pricier, Mitchell's is very likely to see some whittling away of margins during FY13.
However, the company has been planning on concentrating on higher value-added segments, keeping in line with consumer demand, a foray which will likely bode well for the company's business evolution.
At the close of the year, things remain exceptionally positive for MFFL, which has come a long way since its inception. The massive hike in food consumption amongst Pakistani households has translated into mighty increments for almost all food producing and processing industrial companies during FY12 a trend which is likely to continue in the following year. For MFFL- one of the only food manufacturing companies to have actually managed to shuttle down costs despite immense inflationary pressures- this means that the best times are yet to come.http://www.brecorder.com/brief-recordings/0:/1148203:mitchells-fruit-farms-limited/?date=2013-01-29