Mitchells Fruit Farms Limited (MFFL) held its analyst briefing to discuss FY24 results and its future outlook. The following are the key highlights:
- MFFL posted a profit of PkR456mn (EPS: PkR19.9) in FY24, compared to a loss of PkR59mn (LPS: PkR2.6) in SPLY. Management attributed the turnaround to its focus on high-margin products and cost-control measures.
- Sales declined by 3% YoY to PkR2.6bn in FY24, compared to PkR2.7bn in SPLY. According to management, the decline was due to the company’s strategy of focusing on high-margin products and rationalizing distributor stocks. Consequently, gross margins improved to 29.9% from 25.6% in SPLY.
- In line with this strategy, the company’s exports increased by 27.3% YoY in FY24, and management mentioned that exports yield higher margins.
- The company also implemented other cost control measures, reducing distribution and administrative expenses by 22.7%/6.8% YoY, respectively.
- Due to cash flow constraints, the company could not undertake marketing and advertising campaigns, which are essential for driving volume growth.
- In Apr’24, MFFL sold 7 acres of land in Renala Khurd for PkR350mn, with gains from the sale significantly contributing to the company’s operating profit. Management stated that the sale proceeds improved overall cash flow, ensuring smooth sales operations.
- Finance cost remained higher at PkR96mn, up from PkR85mn in SPLY, due to higher KIBOR rates.
- Looking ahead, management plans to expand export sales and the B2B business, especially by utilizing the excess pulping capacity available.
- The company will continue to focus on a selective portfolio of high-margin products, gradually reducing and eventually discontinuing low-margin products.
- Management also intends to relaunch its original products by reviving original recipes.
- The company is not under our formal coverage.
Courtesy – AKD Research
