Food-distribution giant Sysco Corp. (SYY: Quote) reported Monday a profit for the second quarter that declined 3 percent from last year, as sales growth was more than offset by higher food costs. Both adjusted earnings per share and quarterly revenues topped analysts' expectations.
"Our case growth trends improved in the latter part of the quarter as we were well positioned to benefit from the favorable market conditions our customers experienced during the holiday season. Adjusted operating earnings growth in our core business was modest however, as product cost inflation continued at historically high levels and pricing pressure remained acute," President and CEO Bill DeLaney said in a statement.
The Houston, Texas-based company reported net earnings of $250.11 million or $0.43 per share for the second quarter, down from $258.17 million or $0.44 per share in the prior-year quarter.
The results for the latest quarter include a $0.03 negative impact from gross business transformation expenses.
Excluding items, adjusted earnings for the quarter increased to $271.74 million or $0.46 per share from $263.08 million or $0.45 per share in the year-ago quarter.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.44 per share for the second quarter. Analysts' estimates typically exclude special items.
Sales for the quarter grew 9.2 percent to $10.24 billion from $9.38 billion in the same quarter last year, and topped nine Wall Street analysts' consensus estimate of $10.04 billion.
Broadline sales for the quarter totaled $8.32 billion, higher than last year's sales of $7.59 billion, and sales at SYGMA grew to $1.40 billion from $1.31 billion in the year-ago quarter. Other segment sales totaled $559.12 million, up from $515.67 million in the prior-year quarter.
The company had revealed earlier that its U.S. Meat operations are included in the Broadline segment from the third quarter of fiscal 2011, and all prior periods have been restated for comparability.
Operating income for the quarter declined 2.3 percent to $427 million from the year-ago quarter, while adjusted operating income increased 2.5 percent. Meanwhile, gross profit grew 4.8 percent to $1.85 billion from last year.
Food cost inflation, as measured by the estimated change in Sysco's product costs, was 6.3 percent for the second quarter, compared to inflation of 4.5 percent in the prior-year quarter. Inflation continued to be broad-based, but was impacted most significantly by increased prices for meat, canned/dry and frozen products.
Total operating expenses increased 7.1 percent to $1.42 billion from $1.32 billion in the year-ago quarter, primarily due to increase in payroll expense.
SYY closed Friday's regular trading session at $30.90, up $0.12 on a volume of 4.73 million shares, higher than the three-month average volume of 3.34 million shares.
by RTT Staff Writer
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