While the results clearly indicate the foodservice distribution industry’s bellwether is feeling the effects of the economic crisis, its lower earnings nonetheless beat analysts’ expectations. Analysts polled by Thomson Reuters expected earnings of 38 cents a share.
Sysco targeted higher food prices for the profit decline, citing a food-cost inflation rate of 7.0 percent for the quarter, as well as a higher quarterly tax rate. Overall operating income was $422 million, a decrease of 6 percent compared to $449 million in last year’s second quarter. Those results include a $31.7 million loss in the cash surrender value of corporate-owned life insurance, or approximately $0.05 per share compared to a $2.1 million loss in the same period last year.
"The business environment remains difficult in the short term, as demonstrated by our decline in sales last quarter," said Richard J. Schnieders, Sysco's chairman and chief executive officer. "However, we remain focused on execution and operational excellence, which we believe will strengthen our position within the industry over the long term."
"Though not in line with our historical performance, our results for the quarter were solid given the difficult economic conditions," added Ken Spitler, Sysco's president, chief operating officer and vice-chairman. "Our operating companies continue to execute well and I remain confident about our positioning for the long-term."
Sysco noted in its announcement that capital expenditures totaled $99 million and $180 million for the second quarter and first half of fiscal 2009, respectively. The primary areas for investments included facility replacements and expansions, construction of fold-out operations and additions to Sysco's fleet. For full year fiscal 2009, the company projects that capital expenditures will be in the range of $575 million to $625 million.