February 2, 2009 / 2:16 PM / 9 years ago

UPDATE 2-Sysco Q2 profit beats Street; eyes acquisitions

* Says interested in acquisitions

* Q2 profit beats est by 2 cents

* Q2 rev drops 1 pct

* Sees further sales drop for balance of fiscal year

* Shares rise 6 pct (Recasts; adds background, comments from conference call, share movement)

BANGALORE, Feb 2 (Reuters) - Food distributor Sysco Corp (SYY.N) posted a quarterly profit that topped analysts’ average estimate as lower stock-option expense partially offset higher costs related to pension and company-owned insurance, sending its shares up as much as 6 percent.

The company, which has grown by buying smaller companies to become one of the largest food distributors, said on a conference call with analysts that it was interested in making acquisitions.

A company executive said a number of smaller distributors were now interested in talking to Sysco about “folding in.”

The company, which distributes food and other supplies to restaurants, cafeterias and other food-service outlets, however, warned that it expects a further decline in sales for the balance of this year.

Houston-based Sysco said it plans to scale back share repurchases “pretty significantly” for the remainder of the year.

At the end of the second quarter, Sysco’s workforce stood at 48,000 or about 4 percent less than a year earlier.


    For the quarter ended Dec. 27, the company reported a net income of $237.7 million, compared with $264.1 million a year earlier. Revenue came in at $9.15 billion.

    Operating expenses grew $9.5 million, hurt by changes in the cash surrender value of corporate-owned life insurance, a charge for withdrawal from one of Sysco’s multi-employer pension plans and increased company-sponsored pension expense.

    However, stock compensation expense fell by about $3.6 million.

    The company expects 2009 capital expenditures of $575 million to $625 million.

    Shares of the company rose to $23.61 before paring some gains to trade up $1.10 at $23.39 Monday afternoon on the New York Stock Exchange. (Reporting by Anne Pallivathuckal in Bangalore; Editing by Himani Sarkar)

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