This figures amounted to more than $3 billion more than the previous year. At the same time, diluted earning per share rose 16.1% to $1.37 compared with $1.18 last year. Net earnings also increased by 16.6% to $907.02 million compared with $778.3 million last year. Operating expenses as a percent to sales were 14.12%, a 56-basis point reduction versus last year's 14.68%.
For the fourth quarter, the distributorship reported that sales increased 16.7% to $8.14 billion as opposed to $6.97 billion in the 13-week fourth quarter of fiscal 2003. Net earnings climbed 15.6% to $280.6 million compared with $242.7 million in last year's fourth quarter.
In a statement, Richard J. Schnieders, chairman and ceo, said, "Sysco was able to generate solid sales and earnings numbers during the fourth quarter while competing in a market that can best be described as challenging. Our growth strategies, customer service initiatives and sound operational practices allowed our 49,000 associates to overcome the effects of 8% product inflation during the quarter and again generate positive results for our shareholders."
Analyzing market conditions and product inflation, Schnieders said dairy and meat products experienced the highest rates of inflation.
"The overall impact of inflation, particularly on those two items, is a higher sales price but a lower profit margin as a percent to sales. This margin percentage contraction persisted throughout the fiscal year, making the foodservice environment a very tough arena for distributors and suppliers. Our restaurant operator customers also are experiencing softness in their sales as cost and price increases impact consumer spending. As a result, we experienced a moderate slowing of sales in the latter half of the fourth quarter which has continued for the first five weeks of the current quarter." Schnieders said.
Looking to fiscal year 2005, Schnieders said the company will continue to make necessary investments in such projects as its supply chain initiative and the redistribution center.
"We believe that strategic investments such as the redistribution center will enable us to continue to lower our cost of doing business over the longer term. In addition, we're working with our customers by consulting with them in product selection, pricing and quality issues to help them combat this longer-than-usual period of food cost increases," he said.
In discussing operations, Thomas E. Lankford, president and coo, singled out the major capital expenditures and acquisitions for the quarter and fiscal year including the opening of a broadline fold-out facility in Oxnard, CA, that is servicing the northern Los Angeles foodservice market and the ongoing construction of a broadline fold-out facility in Post Falls, Idaho, that is expected to be operational in the spring of 2005.
The firm also expanded its export capabilities with the acquisition of Plant City, Florida-based International Food Group, a leading U.S.-based distributor of foodservice products to chain restaurants in international markets. Another acquisition, Overton Distributors, Inc., a produce distribution company with locations in Raleigh and Charlotte, North Carolina and Nashville, Tennessee, occurred at the beginning of the fourth quarter.
Its National Supply Chain project progressed according to plan during the quarter and to date $216 million have been expended on the project since it began in fiscal 2002. Fourth quarter expenditures for the project were $33.4 million, $27.1 million of which was capitalized and is included in the $150.7 million capital spending for the quarter.
Sysco's broadline facility near Boston, which is scheduled to be the first company to go live with the Northeast Redistribution Center, began implementing their ramp-up in August and is scheduled to receive product in February 2005. By the fall of 2005 all 14 operating companies assigned to the Northeast Redistribution Center will be receiving product.
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