Sysco Corp misses profit estimates on higher input costs

(Reuters) - U.S. food distributor Sysco Corp missed Wall Street expectations for third-quarter profit on Tuesday, hurt by higher raw material costs and a stronger dollar.

Shares of the Texas-based company fell about 2% in premarket trading.

While supply chain constraints have started to gradually ease, this is having little impact on Sysco as it is still struggles with rising prices of meat, dairy and seafood.

This, coupled with a stronger dollar that typically eats into profits of the companies which have sprawling global operations and convert foreign currencies into the greenback, has impacted Sysco.

Despite higher costs, the company has kept prices lower to attract customers, exposing it to stiffer competition from local, regional and multi-regional distributors, according to analysts.

Excluding items, Sysco earned 90 cents per share, missing analysts' average estimate of 92 cents, according to Refinitiv data.

The company's operating expenses in the reported quarter increased 8.7% over the year earlier.

Sysco, however, beat third-quarter revenue expectations as demand recovered from the pandemic-induced slowdown.

Quarterly net sales of the company, which supplies food and related products to restaurants, healthcare and educational facilities, among others, rose 11.7% to $18.88 billion from a year earlier. Analysts on average estimated $18.52 billion.

Analysts said the company's diversified business model, which covers different customer types, product categories and geographies, has helped it sustain in an uncertain macroeconomic environment and made it less vulnerable to industry softness.

(Reporting by Aatrayee Chatterjee in Bengaluru; Editing by Shilpi Majumdar)

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