COVID is putting a damper on Sysco’s earnings
Sysco said Tuesday that the coronavirus crisis continues to suppress sales as the restaurant industry, the Houston food distributor’s primary customer base, still reels from the pandemic.
The company reported a $217 million profit in the first quarter ended Sept. 26, compared with $454 million in earnings during the same period in 2019. Revenues fell 23 percent to $11.8 billion from $15.3 billion a year ago.
Kevin Hourican, Sysco’s president and chief executive, said his company still is managing well in the face of the coronavirus crisis.
“Although our first quarter 2021 results continue to be impacted by the pandemic, we are pleased with our overall expense management and our ability to produce positive free cash flow and a profitable quarter despite a 23 percent reduction in sales,” he said in a Tuesday morning news release.
Hourican took the reins at Sysco just before the pandemic hit, and he has aimed to reduce ad
ministrative costs and transform the company through the crisis. Sysco added $300 million in net new business over the quarter, Hourican said during an earnings call, and “our business transformation is on track.”
Sysco’s cost-cutting measures shielded earningsper-share, which turned out better than expected, said John Boylan, senior equity analyst at Edward Jones. Sysco reported earnings per share of 34 cents, higher than the forecast of 25 cents.
“We applaud it taking aggressive steps to position itself long-term during these uncertain times, andwe believe Sysco will emerge stronger than before,” Boylan wrote in a research note.
Still, Sysco is bracing for more blows to sales in the coming weeks as the coro-
navirus rises again, prompting restrictions from governments across the globe.
“We expect these restrictions to impact secondquarter sales results, particularly in Europe,” he said, pointing to prohibitions in on-premise dining.
Overall, Hourican said Sysco has been working with restaurant owners to extend their patio seasons, bolster digital operations, and maximize revenues from takeout and delivery.
“Our customers are more prepared to keep their businesses up and running and vibrant during this second wave,” Hourican said. “And we certainly are more prepared.”