Food-distribution giant Sysco Corp. (SYY) on Monday reported a slight increase in profit for the third quarter, as sales growth was more than offset by higher poultry and meat costs. The company said its adjusted earnings growth fell short of its own expectations.
Bill DeLaney, president and chief executive officer of Sysco said, "I am pleased with our volume growth trends as we grew our business throughout the quarter by remaining focused on supporting the success of our customers."
Food cost inflation, as measured by the estimated change in Sysco's product costs, was 5.5 percent for the latest quarter.
Sysco noted that while its overall rate of inflation has recently eased somewhat, inflation remains at a high level, with double-digit price increases in the meat and poultry categories.
Broadline sales for the quarter increased 7.6 percent to $8.51 billion, while sales at SYGMA rose 9.8 percent to $1.45 billion. Other segment sales edged up to $586.44 million.
Case volume for the company's Broadline and SYGMA operations combined grew 2.9 percent during the quarter including acquisitions, and 2.3 percent excluding acquisitions.
Total operating expenses rose 2 percent from the year-ago period to $1.43 billion, primarily due to increases in payroll and fuel expenses.
These increases were partially offset by a $36 million charge in the prior-year quarter related to the withdrawal of an operating company from a multi-employer pension plan or MEPP, which created a favorable year-over-year variance.
Houston, Texas-based Sysco's net earnings for the third quarter were $259.55 million, up from $258.48 million in the year-ago period. On a per-share basis, earnings were flat with last year at $0.44.
Excluding items, adjusted earnings for the quarter rose to $289.79 million or $0.49 per share from $281.89 million or $0.48 per share in the year-ago quarter.
On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.43 per share for the quarter. Analysts' estimates typically exclude special items.
Sales for the quarter grew 7.6 percent to $10.50 billion from $9.76 billion in the same period last year, and topped analysts' consensus estimate of $10.45 billion.
In Monday's regular session, SYY is trading at $28.30, up $0.40 or 1.43 percent on a volume of 83,544 shares.
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