Ecolab posts positive first quarter

Food factory, brewery and beverage customers boosted Ecolab Inc.'s quarterly results Tuesday, while hopes for newly acquired energy businesses prompted the company to boost its earnings guidance for the year.

The St. Paul-based sanitizing giant raised its profit expectations largely because of its purchase of Champion Technologies. The Houston-based company, which makes chemicals that thin oil and gas and neutralize corrosive agents in tanks and pipelines, is expected to add 7 cents a share to earnings this year and 50 cents per share annually by 2015.

Ecolab's good news comes just a few weeks after the Champion deal was finalized. After months of delays, the U.S. Department of Justice agreed in early April to let Ecolab buy almost all of Champion Technologies, which will give Ecolab a significant foothold in the oil services industry. Ecolab originally announced the $2.3 billion Champion acquisition in October, but faced scrutiny due to anti-competitive concerns from the government.

With Champion on board, Ecolab officials raised their full-year guidance, saying 2013 earnings should reach $3.45 to $3.55 a share, up from the prior outlook of $3.38 to $3.48 a share.

The company also reported strong first-quarter results Tuesday due to increasing business from food factory, brewery and beverage customers. Ecolab manufactures food safety and sanitizing products for variety of businesses including breweries, restaurants and meat plants.

"The first quarter earnings reached the top end of our forecast range and we delivered excellent earnings growth despite … sluggish trends in North America and softer trends in Europe," CEO Doug Baker said.

The sanitizing chemicals, water treatment and energy services giant overcame the challenging conditions with a combination of pricing gains, new accounts, cost cuts, and strong results in Asia and Latin America.

Ecolab sales rose 2 percent to $2.87 billion during the quarter, while earnings rose 221 percent to $159.6 million, or 53 cents a share. Excluding one-time tax and other items such as those associated with its acquisition of Champion, earnings were 60 cents a share. On average, Wall Street expected 59 cents a share.

Ecolab entered the oil and gas services market in December 2011. At that time it paid $8.3 billion for Nalco, an Illinois-based water treatment firm used in oil refining, energy exploration and paper making.

On Tuesday, officials said Ecolab's new energy business will be restructured to streamline costs. About 500 global energy jobs will be cut, many through attrition. Ecolab expects annual cost savings of $25 million this year and $150 million by the end of 2015 as it eliminates positions, maximizes synergies, and ends duplication at Nalco and Champion.

Ecolab gained 12,500 employees with the Nalco acquisition and 3,300 with Champion.

Restructuring will cost about $55 million after tax, with about $30 million of that landing in 2013. The changes will be completed by year end 2015, said spokesman Mike Monahan.

Ecolab's largest business — global industrial — saw first-quarter sales rise just 1 percent to $1.14 billion, but earnings leapt 19 percent due to higher margin income and new business from food and beverage factory customers. That offset declines in water treatment, paper mill and mining income.

Ecolab's second largest business — global institutional — saw sales and profits rise amid increased business from hotels, restaurants and hospitals, especially in Latin America, Asia and North America.