Houston / TX. (syy) Sysco Corporation the leading global foodservice distribution company, announced business and financial updates in response to changes in the foodservice industry due to the impact of the novel coronavirus (Covid-19) pandemic.
Sysco’s strong balance sheet provides meaningful financial flexibility for the company to navigate current challenges in the «food-away-from-home» market resulting from the spread of Covid-19 and subsequent actions taken across the country to increase social distancing. The Company has cash on hand of approximately USD 2 billion as of March 20, 2020, including a recent USD 1.5 billion withdrawal under its revolving credit facility. Importantly, Sysco has no debt maturities for the next six months. In addition, Sysco is working with its banking partners to explore opportunities to raise additional funds and further strengthen its liquidity.
The Company is taking aggressive action to further strengthen liquidity by reducing variable expenses in response to reduced customer demand, aligning inventory to current sales trends, reducing capital expenditures to only urgent projects, and tightly managing receivables.
«Sysco is operating from a position of financial strength and will weather this storm. We continue to prioritize the health and wellbeing of our associates, customers and communities around the world,» said Kevin Hourican, Sysco’s president and chief executive officer. «In addition to ensuring the safe delivery of food and related products, we are taking decisive actions to manage our costs, capital spend and working capital to maintain a positive free cash flow position.»
In addition to efforts to reduce costs, the Company is actively pursuing new sources of revenue by leveraging its supply chain expertise to provide services to the retail grocery sector. This net new business will help off-set some of the declines in the food-away-from-home segment and also positions the Company well to capitalize on growth opportunities after the Covid-19 crisis subsides.
Examples of growth initiatives that are being implemented include:
- Providing logistics services to retail grocery customers;
- Becoming a supplier of product to retail grocery customers;
- Enabling small restaurants to stand up home delivery operations and online order pick-up service; and
- Distributing cleaning supplies to keep kitchens safe and virus free.
Additionally, Sysco is supportive of the National Restaurant Association in its efforts to seek relief for America’s foodservice industry in the spirit of helping small restaurants bridge the gap of the virus impact on traffic to their locations. The NRA’s proposed policy changes include the establishment of a USD 145 billion recovery fund for the foodservice industry to provide immediate liquidity and expanded access to federal small business loans, among others. It is important to note that Sysco does not desire to receive any financial support through this relief package. The Company’s focus is to support the small business owners that it serves.
Hourican continued, «As the largest foodservice distribution company in the industry, we play a significant role in supporting the food supply chain. Due to the significant impact on the food-away-from-home business, we are pivoting our business to better support the surge in demand that is being experienced in the retail grocery store setting. We are establishing new customer relationships with retail grocers to provide them with logistics services and much needed product. We are also advocating for and supporting our customers, who are essential to our future service. I am proud of our associates for their commitment to safety and the work they are doing to serve an essential industry. I am confident Sysco will emerge a stronger company, even more focused on being our customers’ most trusted and valued business partner.»
The Company has also determined to withdraw its FY18-FY20 three-year plan guidance due to the rapidly evolving impact of Covid-19 on the global economy.