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Mitchell's Fruit Farm Financial Analysis

1) Mitchell's Fruit Farm is one of the oldest food and beverage companies in Pakistan, established in 1933. It produces juices, soft drinks, ketchups, jams, and other products. 2) The food processing industry in Pakistan is the 2nd largest manufacturing industry, accounting for 27% of value added production. Major players include Pepsi, Nestle, and Engro Foods. 3) Mitchell's has faced declining revenue in recent years but saw growth in 2017 through rebranding and new products. However, rising costs prevented profits. It has since reduced costs and managed a small operating profit but remains unprofitable overall due to high financing costs.

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Yasir Rahim
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85 views2 pages

Mitchell's Fruit Farm Financial Analysis

1) Mitchell's Fruit Farm is one of the oldest food and beverage companies in Pakistan, established in 1933. It produces juices, soft drinks, ketchups, jams, and other products. 2) The food processing industry in Pakistan is the 2nd largest manufacturing industry, accounting for 27% of value added production. Major players include Pepsi, Nestle, and Engro Foods. 3) Mitchell's has faced declining revenue in recent years but saw growth in 2017 through rebranding and new products. However, rising costs prevented profits. It has since reduced costs and managed a small operating profit but remains unprofitable overall due to high financing costs.

Uploaded by

Yasir Rahim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

ANALYSIS OF FINANCIAL STATEMENTS

Industrial Analysis (Food Industry)

Global food retail sales are about $4 trillion annually. Pakistan is home to the world’s sixth
largest population with a growing middle class. As of 2020, there are approximately 17
million middle class households and 102 million middle class individuals. The food and
beverage processing industry is the 2nd largest industry of Pakistan after textiles, accounting
for 27% of the value-added production and 16% of employment in the manufacturing sector.
Food processing accounted for an annual average of $223.5m in FDI from 2014-2020

Food processing companies are further categorized into either informal/cottage


establishments or formal establishments.

The three major industry groups are (1) frozen food (2) value addition in major food crops
and (3) fruits, vegetables and intermediate products. Most of the food industry in Pakistan is
concentrated in Punjab (60%) followed by Sindh (30%), KPK (6%), Baluchistan (2%) and
ICT (2%). In total, there are approximately 2500+ food processing units in Pakistan

Major players in the sector include Pepsi, Coca Cola, Unilever, Nestle, Mitchells, Engro
Foods, K&N’s, Shezan, Shan Foods, Dawn Foods.

The company which I have chosen for analysis is Mitchell’s Fruit Farm. Indian Mildura Fruit
Farms was established in 1933, by Mr. Francis J. Mitchell, which was later renamed to
Mitchell's Fruit Farms Limited (MFFL) after independence, in 1948. It is one of the oldest
companies of Pakistan in the food and beverage sector

It is one of the largest beverage companies in Pakistan. Since its inception, It has produced
various products including soft drinks, juices, ketchups, and jams.

Over the years Mitchell’s has evolved into a top-notch, internationally acclaimed food brand
that is set apart due to the impeccable quality. With a wide range of products made with the
freshest fruits and vegetables from its orchards, Mitchell’s aims at providing its consumers
the diverse flavors of Pakistan. Mitchell’s is a major producer and exporter of pickles, jams
and ketchup, the firm has been relentlessly expanding both into local and in international
markets ever since. To better serve its customers the company has been slowly expanding
itself
Mitchell's revenue has been on a continuous decline, with the exception of 2017 when it
increased by 12.6 percent year-on-year. This was due to the company's attempt to rebrand
and reinforce products to the end consumers through competitive pricing and adding new
products, essentially in the confectionery category; hence, the increase was more volume
driven than price. Despite the positive gross profit, Mitchell's was unable to create a positive
bottom-line since the cost effect surpassed the increase in revenue generated through
promotions and extensive distribution.

Mitchell's seems to have recovered from a period of declining sales and incurring losses as
per the quarterly report for nine months ended in 2019. It focused on reducing costs,
specifically the distribution and marketing expenses, which previously failed to contribute to
the bottom-line. It continued to face challenges due to the current government's economic
reforms, in addition to the inflationary pressure which reduced the consumer's purchasing
power. However, despite managing a positive operating profit of Rs59 million in 2019, as
compared to the loss of almost Rs30 million, Mitchell's was unable to command a positive
net profit owing to the inflated finance costs due to the increase in lending base rate.

Due to the nature of its products, Mitchell's is affected by climatic conditions. The company
has tried to explore B2B business in the face of inadequate amount of tomato crop which is
essential in the making of tomato paste.

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