Earlier this month, Ecolab purchased Texas-based Champion Technologies for $2.2 billion, giving it a foothold in the oil business.
, Star Tribune
Ecolab's acquisition helps boost bottom line
- Article by: DEE DePASS
- Star Tribune
- October 30, 2012 - 9:20 PM
Ecolab's big gamble on energy is paying off in a big way.
Not only has the St. Paul-based company nearly doubled its size in the past year, its profit shot up more than 50 percent in the third quarter, thanks largely to its newly acquired oil and refining services business.
On Tuesday, Ecolab Inc. reported net income of $238 million, or 80 cents a share, up from $154.3 million, or 65 cents per share, in the third quarter of last year. The company's total sales also jumped 74 percent to $3.02 billion.
Ecolab has been on a buying spree, snapping up Illinois-based Nalco for $8 billion last year and Texas-based Champion Technologies for $2.2 billion earlier this month. The company said the deals give it a major foothold in the oil drilling, hauling and refining sector and moves it beyond cleaning and sanitizing chemicals.
"We continued to show strong results in the third quarter despite the challenging global economies," CEO Doug Baker said Tuesday. "Growth remained solid across our businesses and regions."
Even so, Ecolab narrowed its earnings guidance for all of 2012 because of restructuring charges related to its purchases. It now expects adjusted earnings to reach $2.96 to $3 a share, up 17 percent from a year ago, but a hair off from its prior forecast of $2.95 to $3.02 a share.
Company officials lauded the acquisitions Tuesday, noting that the integration of Nalco and Ecolab is going "very, very well." Still, they expect restructuring charges to snip 60 cents a share off full-year earnings. That estimate also includes charges for Ecolab's pending purchase of Champion and the impact of Ecolab's decision to sell its vehicle care business for $120 million.
Most analysts cheered the growing revenue potential that Nalco brings Ecolab, but some expressed concern that Nalco's energy business would bring greater volatility to a company better known for its predictable sales of cleaning chemicals, water treatment and services to large chain restaurants, hotels, hospitals and schools.
But Baker noted that the integration of Nalco and Ecolab is on track to save $75 million in synergies this year and $250 million over the next few years.
For the quarter, sales from Ecolab's U.S. cleaning and sanitizing business rose 1 percent to $774 million, while net income rose 17 percent. International cleaning sales rose 3 percent to $813 million thanks to growth in Latin America, Asia and even Europe. The company saw 2 percent pricing gains in Europe.
On a combined basis, global water sales rose 5 percent as North American and Latin America sales offset weak demand from industrial users in Europe and Asia. Paper sales fell 4 percent.
Dee DePass • 612-673-7725
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