US food distributor Performance Food has reported lower fourth-quarter earnings, hit by higher raw product costs.

The company posted net earnings of US$12.2m, or 26 cents per share, for the fourth quarter to 3 January, compared to $17.5m, or 37 cents per share, a year earlier.

Performance Food said in January that it expected earnings for the fourth quarter to be in the range of 24 cents to 26 cents per share, compared to previous guidance of between 40 cents and 45 cents per share, mainly due to higher raw product costs.

Fourth-quarter net sales rose to $1.50bn, from $1.20bn a year earlier.

For the full year, the company reported net earnings of $74.2m, or $1.54 per share, compared to $66.5m, or $1.42 per share, in the previous year. Full-year net sales increased to $5.5bn from $4.4bn a year earlier.

"Although the 8% increase in earnings per share for 2003 did not meet our expectations, the strength of our business is demonstrated by our ability to increase sales throughout all of our divisions in a challenging environment," said CEO C Michael Gray.

"We have continued to significantly outpace the growth of the industry. We are working our way through our near-term operational challenges and we will be a stronger, more productive company as a result. As the economy improves and we put these challenges behind us, we expect to be able to demonstrate solid earnings growth in 2004 and beyond," Gray added.