Meat, poultry prices drag on Sysco earnings
May 4, 2015
by Erica Shaffer
HOUSTON – Rising meat, poultry and dairy prices pinched third quarter earnings at Sysco Corp., the largest broadline foodservice distributor in the United States.
For the first 39 weeks of fiscal 2015, Sysco reported food cost inflation was 4.8 percent. The company said higher product costs were driven mainly by inflation in the meat, dairy and poultry categories. Meanwhile, changes in foreign exchange rates decreased sales by 0.9 percent.
For the third quarter ended March 28, the company reported net income $177 million or 30 cents per share, a 2.2 percent decline from $180.9 million, 31 cents per share in the comparable year-ago quarter. Sales rose 4.2 percent to $11.75 billion.
“Sales growth, while solid for the quarter at 4 percent, did moderate from our trends in the first half of the fiscal year primarily due to lower levels of inflation and a greater unfavorable impact from foreign exchange translation,” said Bill DeLaney, president and CEO. “Adjusted earnings per share increased 5 percent and were in line with our expectations, as we continued to focus on providing great service to our customers, managed our gross profit growth reasonably well, and benefitted from a favorable tax rate.”
Regarding Sysco’s merger with US Foods, a hearing on the Federal Trade Commission's motion for a preliminary injunction is scheduled to begin May 5 in the US District Court for the District of Columbia. On April 21, Sysco filed a memorandum with the federal court opposing the FTC’s effort to block the proposed merger.
“The company believes the completion of its pending merger with US Foods will ultimately help it provide better service to its customers at a lower cost by becoming more efficient, innovative and competitive,” the company said in a statement.