MITCHELLS FRUIT FARMS LIMITED

NAJAM KHAN,
Research Associates
July 23 - 29, 2007

Mitchell's is the only major food company in Pakistan, head office located at Lahore was established in 1933. When the country achieved its independence in 1947, the name of the company was changed to "MITCHELL'S Fruit Farms Ltd." from "Indian Mildura Fruit Farms Ltd" with the brand name of "MITCHELL'S"

Mitchells was the first company of the country to achieve ISO 9001 official recognition in 1998 and thus becoming more competitive on the international stage as well. Mitchells not only escalating its product line but also keeping quality through the years by using best quality of raw materials, fresh from our own farms and orchards to the adoption of latest production techniques.

SIX YEAR'S REVIEW

(Rupees in thousands)

2001

2002

2003

2004

2005

2006

Net sales

680,073

692,379

744,660

694,868

803,647

751,703

Gross profit

127,240

129,686

150,391

118,720

124,986

104,653

Gross profit to sales - %

18.71

18.73

20.20

17.09

15.55

13.92

Profit before tax

50,592

40,275

52,483

34,739

28,092

(3,480)

Profit before tax to sales - %

7.44

5.82

7.05

5.00

3.50

(0.46)

Profit after tax

31,577

26,387

37,319

21,262

20,655

(708)

Earnings per share - Rupees

7.52

6.28

7.40

4.22

4.10

(0.14)

Capital Expinditure

45,082

34,651

41,676

84,688

31,021

26,107

Production:

Confectionery - in tons

6,002

5,854

6,174

5,006

5,848

4,053

Groceries - in dozens

543,970

619,246

615,018

656,864

810,280

883,893

A decline of 6.4% has been shown in net sales during 2006 to Rs.751 mn in contrast with Rs.803 mn in 2005. Gross profit also registered a decline in 2006 by Rs20.3 mn from Rs.124 mn in 2005. Share of gross profit in net sales in 2006 has turned down to 13.92% from 15.55% in 2005. Production of confectionery was 4053 tons in 2006 showing a decline by 1795 tons or 30.69% while comparing with previous year. Profit after and before tax stands at Rs20.66 mn and Rs28.092 mn in 2006. Export sales recorded 42% increase by contributing Rs24 mn to net revenue in 2006 while in contrast with Rs16.9 mn in 2005.

CONFECTIONERY - IN TONS

2001

6,002

2002

5,854

2003

6,174

2004

5,006

2005

5,848

2006

4,053

HALF YEAR PERFORMANCE-2007

Although gross sales for six months are higher by Rs.18.68 mn or 38.75% than the corresponding period of last year resulting from product price rationalization and a normalized price of sugar. Profitability, on the other hand, continues to remain under pressure due to constant increase in the cost of the raw materials. Other operational expenses, namely financial, labour and freight costs stands at Rs1.57 mn in half year of 2007 have shown an escalating trend as against last year in the same period. Profit before the tax registered at Rs10.71 mn showing a declining trend in contrast to previous period, however, profit for the period stands at Rs8.01 mn. Exports have recorded a growth of 43.17 as compare to the first half of the last year.

FUTURE STANCE

Althoguh the year under review has been difficult for the company, we remain confident that the situation will improve in the year to follow. Process Improvements and product rationalization measures have been taken so that input costs can be reduced. A new pet bottle filling plant is in the process of installation so that from the next season we would be offering our fruit drinks in pet bottles result in substantial economy packaging cost

PROFIT AND LOSS ACCOUNT

For the Half Year Ended March 31, 2007 (UN-AUDITED)

 

October to March

 

2007 Rupees

2006 Rupees

Sales

391,208,135

381,999,899

Cost of sales

324,324,598

333,796,110

Gross profit

66,883,537

48,203,789

Administration expenses

(15,877,197)

(13,520,865)

Distribution and marketing expenses

(30,636,605)

(29,613,861)

Other operating expenses

(796,705)

(264,846)

Other Operating income

1,570,617

8,977,914

Profit from operations

21,143,647

13,782,131

Finance cost

(10,433,774)

8,813,199

Profit before tax

10,709,873

22,595,330

Taxation

(2,700,000)

(2,000,000)

Profit for the period

8,009,873

20,595,330

Earnings per share -Basic and diluted

1.59

0.59