Higher Volume Boosts Sysco -- WSJ
May 03 2016 - 2:05AM
Dow Jones News
By Anne Steele
Sysco Corp. said profit shot up 23% in its latest quarter as
volume improved in the U.S. and the food giant makes moves to
manage expenses.
Results easily beat expectations, and shares added 0.9%
premarket to $46.50.
Sysco, the No. 1 distributor of food and supplies to
restaurants, hospitals and other venues in the U.S., has lately
faced rising competition from smaller, specialty distributors and
wholesale stores. In its fiscal third quarter, Sysco's domestic
case volume grew 3.6%. Sales volume rose 3.4% among smaller, local
restaurants -- a promising sign as Sysco has been struggling in
that area, and those customers are more profitable than national
chains.
Chief Executive Bill DeLaney said local growth and expense
management helped drive operating profit, "and we are committed to
sustaining this momentum in our fourth quarter and into fiscal
2017."
Sysco said in February it is eliminating 1,200 jobs -- about 2%
of its workforce -- and abandoning a yearslong technology overhaul
in an effort to accelerate profit growth. Mr. DeLaney has said the
moves would help boost operating income by at least $500 million by
the end of 2018.
In all for the quarter, Sysco earned $217.1 million, or 38 cents
a share, up from $177 million, or 30 cents a share, a year earlier.
Excluding certain items, adjusted earnings rose to 46 cents a share
from 40 cents.
Revenue rose 2.2% to $12 billion.
Analysts had projected 42 cents in adjusted earnings per share
on $11.87 billion in revenue, according to Thomson Reuters.
Gross margin improved 34 basis points to 17.9%.
Sysco posted $586,000 in acquisition-related costs, none related
to its abandoned merger with rival US Foods Inc., which Sysco
walked away from in June of last year. A year earlier, Sysco had
booked $46.6 million in the quarter related to that deal.
The failed merger cost Sysco hundreds of millions of dollars --
and it opened the door for activist investor Nelson Peltz of Trian
Fund Management LP. In August, the fund disclosed a 7% stake in
Sysco, which Mr. Peltz said wasn't living up to its potential. Less
than a week later, Sysco named Mr. Peltz and another Trian
representative to its board.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 03, 2016 02:50 ET (06:50 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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