THE BUSINESSWEEK 50 RANKINGS + 25

58

Sysco

If you’ve ever wandered into a Seattle’s Best Coffee for your morning latte, you’ve been serviced by Sysco. The Houston-based food-service distributor is the largest in North America, with 172 distribution facilities that supply everything from chains to small private restaurants, colleges, and hospitals. Higher fuel costs weighed on Sysco’s 2006 profits, which fell 11%, to $908.1 million. Last year the U.S. trucking industry spent $10.6 billion more on fuel than in 2005, passing much of this extra cost on to its distributors, which significantly increased Sysco’s operating expenses. But the company was able to broaden its hold on the highly fragmented industry by rolling up several smaller rivals. It acquired new food service suppliers and distributors last year, giving it about 14% of the market. In many cases, Sysco was able to boost sales at those companies by giving the restaurants and institutions they supply a wider range of products from which to choose. That strategy helped sales jump 7.8%, to $33.9 billion, in 2006, more than double the 3.2% growth rate of the previous year. CEO Richard Schnieders plans to keep pushing in that direction, too: He has already paid $43 million so far this year to buy more specialty food producers, as well as a distributor.

Overall Grade

A-

Market Data

SYY

Market Value
(2/28/2007)

$20.4 Billion

Profitability*

37.4%

A-

Sales Growth Rate**

6.9%

C+

12-Month Sales

$33.9 Billion

12-Month Net Income

$0.9 Billion

Total Return Past 12 Months

12.0%

Past 36 Months

-12.1%

Economic SectorConsumer Staples
IndustryFood Distributors
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.

Richard J. Schnieders

Richard J. Schnieders

CEO since 2003


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Data as of 2/28/07 provided by Standard & Poor's Compustat