Sysco Profit Tops Expectations

Sysco Corp. said profit rose more than expected in its latest quarter, helped by an uptick in sales and a drop in merger-related expenses.

Houston-based Sysco, the nation's largest distributor, by sales, of food and other supplies to restaurants, hospitals and cafeterias, last year dropped its $3.5 billion plan to buy rival U.S. Foods Inc. after a federal judge effectively blocked the deal on antitrust grounds. Expenses tied to the proposed deal weighed on last year's results and were absent in the latest quarter.

In the wake of the deal's collapse, Sysco outlined a three-year plan to improve its annual operating income by $400 million through more stringent cost management and aggressive sales efforts, weeks after adding activist investor Nelson Peltz to its board.

"We are on track to achieve our financial objectives for the first year of our three-year plan," Chief Executive Bill DeLaney said Monday.

Sysco saw sales inch higher in its most-recent period as case volume grew, helping to offset the effects of food-cost deflation and a hit from adverse foreign-exchange rates. In its domestic operations, case volume increased 3.9%.

Gross profit margin improved to 17.7% from 17.3% a year earlier.

Overall, the company reported a profit of $272.4 million, or 48 cents a share, up from $158 million, or 27 cents, a year earlier. Excluding merger-related charges that affected the year-earlier period, per-share earnings rose to 48 cents from 41 cents.

Revenue increased 0.6% to $12.15 billion. Analysts had projected 41 cents in adjusted per-share profit on $12.14 billion in revenue, according to Thomson Reuters.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

February 01, 2016 09:15 ET (14:15 GMT)

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