UPDATE:Sysco 1Q Net Jumps 18% On Gains; Sales Down 8.1%
By Paul Ziobro, Of DOW JONES NEWSWIRES
(Update adds analyst comment.)
NEW YORK -(Dow Jones)- Sysco Corp.'s (SYY) fiscal first-quarter profit rose
18% on tax related and other gains, with sales falling 8.1% amid continuing
declines in restaurant sales and food deflation.
Sysco is heavily exposed to the slump in eating out, as it provides food and
other items to thousands of restaurants. But Chief Executive Bill DeLaney said
the company is "encouraged by the stabilization of our volume trends in recent
weeks."
Sysco, North America's largest food-service distributor, continued to cut
costs by eliminating jobs and trimming other payroll expenses to keep up with
the sales decline, helping to turn in results generally in line with
expectations.
"The end market's not doing great, but the company's finding opportunities to
cut costs," said Pali Capital analyst Robert Summers, who rates the stock buy.
For the quarter ended Sept. 26, Sysco reported earnings of $326 million, or 55
cents a share, up from $276.8 million, or 46 cents, a year earlier. The latest
results included gains of 11 cents related to items such as the company's IRS
settlement and impact from the change in the value of corporate-owned life
insurance.
Revenue fell to $9.1 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 45
cents on $9.16 billion in sales.
Gross margin rose to 19.2% from 19.1%.
In August, Sysco reached a $952 million settlement with the Internal Revenue
Service, clearing up a large tax overhang and giving the company the flexibility
to pursue acquisitions.
Shares closed at $26.45 Friday and were inactive premarket Monday.
-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; paul.ziobro@dowjones.com
(Nathan Becker contributed to this article.)
(END) Dow Jones Newswires
11-02-090912ET
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