(Reuters) – Packaged and fresh food supplier Sysco on Tuesday kept its full-year sales and profit forecasts unchanged despite beating estimates for second-quarter revenue, as a recovery in demand from restaurants remains uneven.
WHY IT’S IMPORTANT
With prices of essentials staying high in the U.S., many budget-conscious consumers are still choosing to eat meals at home rather than dining out.
Sales in the company’s food service business in the U.S., which caters to offices, amusement parks, casinos, bowling alleys and movie theaters, rose 4.1% in the quarter ended Dec. 28 from a year ago, slower than the 4.6% year-on-year increase in the prior quarter.
Higher costs of products such as dairy and poultry have also pressured Sysco’s quarterly margins, leading to a 11-basis-point decrease to 18.1% in the second quarter.
MARKET REACTION
The company’s shares fell 4% after the results were published.
CONTEXT
Sysco is a distributor of a range of food items from meats and fresh produce to frozen foods and baked goods.
The company is trying to source raw materials from suppliers at lower prices and keep production costs in check, the results of which it has said would reflect only in the second half of the fiscal year.
BY THE NUMBERS
Sysco reiterated its full-year forecasts for the second time; it expects net sales to grow between 4% and 5% and adjusted earnings per share to grow between 6% and 7%.
The Houston-based company’s second-quarter sales rose 4.5% to $20.15 billion from a year ago. Analysts on average expected $20.10 billion, according data compiled by LSEG.
(Reporting by Aamir Sohail in Bengaluru; Editing by Sahal Muhammed)
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