S&P revises Sysco's outlook to negative, says company's profitability, credit ratios will weaken modestly over next year due to increasing business transformation costs, high input prices, intense competition

Nevin Barich

LOS ANGELES , February 15, 2012 (press release) – Standard & Poor's (S&P) revised Sysco Corp.'s outlook to negative, saying the company's profitability and credit ratios will weaken modestly over the next year due to increasing business transformation costs, high input prices and intense competition, Reuters reported Feb. 15.

According to S&P, the outlook revision to negative from stable reflects the potential of risks associated with Sysco's business transformation project, high food and fuel costs in 2012, and intensely competitive industry conditions. These factors could prevent the company from improving free cash flow and cash flow measures, S&P said.

S&P believes that Sysco should be able to improve its credit ratios and maintain its financial risk profile if food costs remain elevated but begin to stabilize, fuel costs do not rise considerably, and the company's business transformation project is implemented over the next few years without meaningful disruption.

The primary source of this article is Reuters, London, England, on Feb. 15, 2012.

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