Business Recorder
Mitchell’s Fruit Farms Limited (PSX: MFFL) has a history that dates back to 1933. After Independence, the company’s name was changed from Indian Mildura Fruit Farms to Mitchells Fruit Farms Limited. The company went public in 1993 and was listed on the stock exchange in 1996. The principal activity of the company is manufacturing and sales of various farm and confectionary products including beverages, ketchups and sauces, preserves, read to cook and ready to eat food range etc. Pattern of Shareholding As of June 30, 2025, MFFL has a total of 22.875 million shares outstanding which are held by 2140 shareholders. Directors, CEO, their spouse and minor children have the highest shareholding of 61.0765 percent in the company followed by local general public holding around 21.28percent shares of MFFL. NIT and ICP have a stake of 9.60 percent in the company while jointstock companies account for 5.20 percent shares. The remaining shares are held by other categories of shareholders. In October 2025, CCL Holding (Private) Limited acquired 58.7727 percent shareholding and obtained management control of the Company. Performance Trail (2019-25) MFFL’s topline posted year-on-year growth over the period under consideration except for a dip in 2024. The company could post net profit only in 2021, 2024 and 2025. MFFL’s gross margin which posted considerable improvement in 2019, ticked down in 2020. This was followed by improvement in 2021 and a drastic fall in 2022. In the subsequent two years, MFFL’s gross margin significantly improved and attained its optimum level in 2024. In 2025, gross margin ticked down. MFFL’s operating profit margin which remained range-bound (hovering between 0.5 percent and1.6percent) also reached its optimum level in 2024 followed by a downtick in 2025. The detailed performance review of the period under consideration is given below. In 2019, the net revenue of MFFL surged by 22 percent year-on-year to clock in at Rs.1987.55 million. This came on the back of growth in both local and export sales volumes. Moreover, the company also raised its prices to pass on the effect of rising inflation to its consumers. Gross profit ascended by 71.78 percent year-on-year in 2019 while GP margin climbed to 21.86 percent from 15.53 percent in 2018. Administrative expense almost stayed the same in 2019 despite inflation as the number of employees was reduced from 312 in 2018 to 279 in 2019 which pushed down the salaries expense. Marketing and distribution expense shrank by 30.71 percent year-on-year on account of lower salaries of sales force, thinner advertisement and promotion budget as well as distributor expense incurred in 2019. Cost control measures resulted in operating profit of Rs.11.19 million in 2019 as against operating loss of Rs.293.65 million posted in 2018. OP margin stood at a skimpy 0.56 percent in 2019. Other income dwindled by 38.81 percent year-on-year in 2019 due to lower profit on the revaluation of livestock, lower exchange gain as well as no liabilities written back in 2019. Finance cost continued to enlarge and posted 59 percent year-on-year hike on the back of higher discount rate during the year. High finance cost resulted in net loss of Rs.80 million in 2019 which was 72.66 percent lower than the net loss posted by MFFL in 2018. Loss per share also plunged from Rs.37.16 in 2018 to Rs.10.16 in 2019. In 2020, the topline mustered a marginal 6.29 percent year-on-year growth to clock in at Rs. 2112.49 million. MFFL, being classified as the producer of essential items, continued its operations amidst the outbreak of COVID-19, however, tamed demand didn’t allow the company to attain robust sales volume in 2020. The increase in the prices of essential raw materials coupled with supply chain bottlenecks due to lockdowns imposed during the year resulted in gross profit inching up by a mere 1.84 percent year-on-year in 2020 with GP margin shrinking to 20.94 percent. Administrative expenses expanded by 11.40 percent year-on-year in 2020 due to advisory cost incurred for undertaking an investment plan. Human resource headcount further fell down to 253 in 2020. Distribution expense ticked down by 10.26 percent in 2020 due to lower sales volume and lower advertising & promotion budget allocated for the year. Operating profit magnified by 211.58 percent in 2020 with a slight improvement of 100 bps in the OP margin to clock in at 1.65 percent. Other income nosedived by 22 percent in 2020 mainly due to lesser scrap sales as well as no profit recognized on the sale of fixed assets during the year. Finance cost fell by 5.14 percent year-on-year despite the fact that discount rate was high for the most of the part of fiscal year 2020. This was the result of lower bank borrowings during 2020. However, gearing ratio jumped up from 86 percent in 2019 to 91 percent in 2020 due to decline in total equity on account of un-appropriated loss. MFFL posted net loss of Rs.55.44 million in 2020 which was 30.70 percent lesser than the net loss registered in 2019. Loss per share inched down to Rs.7.04 in 2020. In 2021, MFFL’s topline expanded by 4.65 percent year-on-year to clock in at Rs.2210.62 million. This was on the back of increased sales volumes and decreased sales returns during the year. Cost economies achieved during the year enabled MFFL to pull off 10.60 percent year-on-year growth in the gross profit while GP margin also slightly ticked up to 22.14 percent in 2021. The company was able to squeeze its administrative cost by 9 percent year-on-year in 2021; however, fourfold growth in advertisement expense pushed distribution expense up by 22.16 percent year-on-year during 2021. Other expense also surged by 168.76 percent in 2021 on the back of increased provisioning for WWF and WPPF. Exchange loss as well as loss on disposal of biological assets also spiked in 2022. Despite tremendous growth, other expense stood at around 0.4 percent of MFFL’s net sales in 2022. Operating profit tumbled by 7.29 percent in 2021 with OP margin recorded at 1.46 percent. What gave an incredible support to bottomline was 65.49 percent year-on-year decline in finance cost in 2021. This was on the back of downward revision in discount rate coupled with a massive reduction in borrowings as the company injected fresh equity of Rs.750 million through issuance of right shares which enabled it to meet its working capital requirements and pay off its outstanding debt. This resulted in a massive decline in gearing ratio which clocked in at 25 percent in 2021. Other income also magnified by 188.69 percent in 2021 on the back of hefty scrap sales, higher profit recorded on revaluation of livestock as well as greater income recognized on bank deposits. MFFL boasted net profit of Rs.10.47 million in 2021 with NP margin of 0.47 percent. EPS clocked in at Rs.0.49 in 2021. This was the first time after 2015 that MFFL posted net profit. In 2022, the sales revenue of MFFL grew by 12.61 percent to clock in at Rs.2489.29 million. Global increase in the prices of commodities, Pak Rupee depreciation, higher energy cost as well as devastating floods which affected the timely procurement of raw materials inflated the cost of sales by 33.36 percent in 2022.Gross profit went down by 60.39 percent in 2022 with GP margin drastically falling down to 7.79 percent. Massive increase in salaries and wages, advertisement expense, freight expense etc resulted in 66.28 percent and 76.30 percent rise in administrative expense and marketing expense respectively in 2022. This resulted in operating loss of Rs.597.19 million in 2022. Other income grew by 36.7 percent in 2022 mainly on account of exchange gain. However, other income was greatly offset by 44.28 percent higher finance cost incurred by MFFL in 2022. Higher finance cost was the result of multiple raises in discount rate during the year. Massive decline in MFFL’s equity due to hefty un-appropriated loss resulted in gearing ratio of 74 percent in 2022.The company posted net loss of Rs.621.97 million in 2022 with loss per share of Rs.27.19. In 2023, the topline of MFFL grew by 9.47 percent year-on-year to clock in at Rs. 2724.93 million.During the year, the company focused on its profitable businesses rather than increasing its sales volume. Reduced sales volume resulted in massive decline in raw & packing materials, boiler expense, dairy expense as well as repair & maintenance charges incurred during the year. Sales mix revision and cost reduction allowed the company to improve its gross profit by 234.39 percent year-on-year in 2023 while GP margin climbed to an unprecedented level of 23.78 percent. Significant reduction in freight and advertising expense pushed distribution expense down by 18.56 percent year-on-year in 2023. Administrative expense also went down by 17.59 percent in 2023 due to lower payroll expense as headcount was reduced from 292 employees in 2022 to 284 employees in 2023. Greater provisioningagainst doubtful debts as well as receivable balances written off during the year resulted in 278.77 percent spike in other expense which clocked in at Rs.63.95 in 2023. Operating loss shrank by 91.88 percent in 2023 to clock in at Rs.48.52 million. Other income grew by 124.37 percent in 2023 primarily on the back of excess accrued liabilities written back during the year. High cost of borrowing resulted in 130 percent rise in finance cost. Gearing ratio went up to 81 percent in 2023 mainly due to shrinkage in total equity on account of higher accumulated losses. MFFL’s net loss shrank by 90.48 percent in 2023 to clock in at Rs.59.198 million with loss per share of Rs.2.59. MFFL’s net sales fell by 3 percent to clock in at Rs.2,642.16 million. This was on account of improved export sales.Cost of sales slid by 10.78 percent during the period on account of improved operational efficiency and cost optimization measures put in place by the company. Gross profit enhanced by 21.76 percent in 2024 with GP margin clocking in 29.87 percent.Administrative expense shrank by 6.84 percent during the year due to lower payroll expense as the company streamlined its workforce from 292 employees in 2023 to 284 employees in 2024. Distribution expense plunged by 22.74 percent in 2024due to lower advertising expense, selling charges as well as salaries expense of sales force. Other expense plummeted by 15.82 percent in 2024 on account of high-base effect as the company booked allowance for ECL in the previous year. Exchange loss also considerably shrank in 2024.MFFL posted operating profit of Rs.216.69 million in 2024. MFFL posted operating profit of Rs.216.69 million in 2024 with OP margin of 8.20 percent. Other income mounted by 245.15 percent in 2024 due to gain recognized on disposal of fixed assets as during the year, MFFL sold 7 acres of its land located in RenalaKhurd to a third party. Finance cost ticked up by 13 percent in 2024 due to elevated discount rate. Lower accumulated loss and a decline in outstanding borrowings during the year resulted in gearing ratio of 38 percent in 2024. The company posted net profit of Rs.456.242 million in 2024 with EPS of Rs.19.95 and NP margin of 17.27 percent. In 2025, MFFL posted year-on-year uptick of 0.78 percent in its topline which clocked in at Rs.2662.74 million. This was on the back of growth in export sales and a favorable sales mix. Cost of sales surged by 2.13 percent in 2025 due to higher price of raw and packaging materials and elevated energy cost. This resulted in 2.41 percent slide in gross profit in 2025. GP margin also nosedived to 28.92 percent in 2025. Administrative expense escalated by 16.31 percent in 2025 on account of elevated legal & professional charges incurred during the year. Conversely, payroll expense posted a dip as the company streamlined its workforce from 284 employees in 2024 to 276 employees in 2025. Distribution expense mounted by 12.43 percent in 2025 as the company made a strategic shift towards modern trade channelswhich carried higher servicing costs. MFFL also offered trade incentives and expanded its sales force to tap new market segments.Other expense multiplied by 14.44 percent in 2025 due to greater balances written off during the year and also because of allowance booked for ECL. MFFL recorded 45.23 percent decline in its operating profit in 2025 with OP margin clocking falling down to 4.46 percent. Other income tapered off by 96.35 percent in 2025 due to high-base effect as the company had recognized gain worth Rs.356.689 million on the disposal of fixed assetsin the previous year. Finance cost plunged by 11.26 percent in 2025 due to lower discount rate. External borrowings increased during the year which pushed up the gearing ratio to 50 percent in 2025. Net profit eroded by 99.63 percent to clock in at Rs.1.674 million in 2025. This translated into EPS of Rs.0.07 and NP margin of 0.06 percent in 2025. Recent Performance (1HFY26) During the first half of the ongoing fiscal year, MFFL posted 4.42 percent growth in its topline which clocked in at Rs.1325.64 million. This came on the back of superior export sales recorded during the period while local sales continued to recede. Cost of sales spiked by 7.85 percent in 1HFY26 on the back of higher prices of commodities and other agricultural inputs, elevated energy cost and greater packaging and logistics charges incurred during the period. This pushed down gross profit by 4.60 percent in 1HFY26 with GP margin clocking in at 25.19 percent versus GP margin of 27.57 percent recorded in 1HFY25. Relative stability of Pak Rupeeand petroleum prices resulted in 10.76 percent thinner distribution expense in 1HFY26. Conversely, administrative expense mounted by 29.82 percent in 1HFY26 as the company underwent post acquisition system enhancement and organization strengthening. Other expense mounted by 273.34 percent in 1HFY26 likely due to increase in profit related provisioning done during the period. MFFL posted operating loss of Rs.9.42 million in 1HFY26 versus operating profit of Rs.51.38 million posted in 1HFY25. What turned tables for MFFL in 1HFY26 was 1481.58 percent improvement in other income which was the result of capital gain of Rs.223 million realized on the disposal of land. Monetary easing coupled with lesser outstanding borrowings squeezed finance cost by 34.47 percent in 1HFY26. Not only did the company pay off a considerable portion of external loans during 1HFY26 but also fully repaid the sponsor loan amounting to Rs.204 million. Net profit was recorded at Rs.176 million in 1HFY26, up 2633 percent year-on-year. This translated into EPS of Rs.7.69 and NP margin of 13.28 percent in 1HFY26 as against EPS of Rs.0.28 and NP margin of 0.51 percent registered in 1HFY25. Future Outlook Sales mix optimization, export emphasis and cost saving measures will continue to drive profitability in the coming times. The acquisition and attainment of management control of MFFL by CCL Holding (Private) Limited will prove to be a good omen for the company. It will not only strengthen its operational performance but will also enable it to augment its geographical outreach.
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