Inflation in meat & poultry impacts Sysco Q3 results
Sysco Corporation announced financial results for its 13-week third fiscal quarter ended March 28, 2015. Sales increased 4.2% to $11.7 billion. Gross profit increased 3.1% to $2.1 billion, though gross margin decreased 17 basis points to 17.52%. Adjusted operating income decreased 2.7% to $377 million, and operating income decreased 1.6% to $327 million.
"Sales growth, while solid for the quarter at 4 percent, did moderate from our trends in the first half of the fiscal year primarily due to lower levels of inflation and a greater unfavorable impact from foreign exchange translation. Adjusted earnings per share increased 5 percent and was in line with our expectations, as we continued to focus on providing great service to our customers, managed our gross profit growth reasonably well, and benefitted from a favorable tax rate," said Bill DeLaney, Sysco's president and chief executive officer. "Our expense management performance trends improved modestly from earlier in the year and remain an area of intense management focus as we move forward in the fourth quarter and begin our planning process for fiscal 2016."
Food cost inflation was 3.7%, as measured by the estimated change in Sysco's product costs, driven mainly by inflation in the meat and poultry categories. In addition, sales from acquisitions (completed within the last 12 months) increased sales by 0.6%, and the impact of changes in foreign exchange rates for the third quarter decreased sales by 1.3%. Case volume for the company's Broadline and SYGMA operations combined grew 2.5% during the quarter and approximately 2.2%, excluding acquisitions.
Sales for the first 39 weeks of fiscal 2015 were $36.3 billion, an increase of 6.0% compared to the same period last year. Food cost inflation was 4.8%, as measured by the estimated change in Sysco's product costs, driven mainly by inflation in the meat, dairy and poultry categories. In addition, sales from acquisitions (completed within the last 12 months) contributed 0.6% to sales, and the impact of changes in foreign exchange rates decreased sales by 0.9%. Case volume for the company's Broadline and SYGMA operations combined grew 2.8% and approximately 2.5%, excluding acquisitions.
Gross profit was $6.3 billion, an increase of 5.1% compared to the same period last year. Gross margin declined 15 basis points to 17.45%.
Source: Sysco Corp.
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