IFDA Releases Annual Distributor Productivity Financial Report

{mosimage}Top performers in this year's report showed higher increased sales, higher gross margin, but also slightly higher payroll and non-payroll expenses compared with the rest of the survey respondents, the survey showed.

The new study examines profitability results, expense management, and return on investment data along several other relevant data from a sample of 41 foodservice distributors reporting results for the year 2005.

A key part of the DPFR is the analysis of those respondents in the top half of total return on assets, called "most profitable firms." The report studies the differences between those companies and the rest of the respondents in order to identify factors that lead these companies to a superior level of profitability. This year's study also includes a special section that examines trends in redistribution and how distributors are managing steeply rising fuel costs.

The respondents in this year's study represent a variety of different sized distributors, reporting median annual sales of $65.9 million, although they ranged in size from small firms with annual sales under $20 million to larger companies with annual sales over $1 billion. Respondents also represent a range of business. For example, the reported median for sales to independent single unit operators was 44.4%, however, this was the midpoint of a wide range, with a 25th percentile of 26.1% and a 75th percentile of 65% of sales from independent operators.

After accounting for any other non-distribution related income, plus interest expenses net of any interest income, the median distributor in this study arrived at a net income before taxes of 1.7% of annual sales. Even though the top performers had higher operating expenses, the study showed that they still reported a higher net profit, 2.5%.

Redistribution and high fuel costs were areas of special interest looked at this year. Almost three-quarters of the responding companies said reducing inventory levels was the primary reason for using redistribution. Reducing the number of inbound loads was the second most important reason for using redistribution.

The report also provides details on the multiple actions that companies are taking to combat rising fuel prices and methods being utilized to monitor or reduce costs.

Along with the section on top performing firms, the body of the report provides detailed analysis of the data for individual departments. This information is classified into companies representing three different annual sales categories, and for firms in with different types of customer mixes, e.g. those mainly serving independents vs. those mainly serving chain accounts. The final report is now available for purchase in electronic form or hard copy. IFDA members may purchase the report for $125. Non-member pricing is $325. To order the report, click here.


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