Ecolab Inc.'s (ECL) fourth-quarter earnings fell 32% on
restructuring and acquisition-related charges.
Shares slid 2.9% to $60.80 in premarket trading as revenue
growth fell short of analyst expectations and as Ecolab issued a
downbeat first-quarter outlook.
The company expects first-quarter earnings of 46 cents to 49
cents a share, while analysts polled by Thomson Reuters predicted
54 cents a share. The company reaffimed its full-year view.
Ecolab--which provides cleaning, sanitation and pest-control
products and services-- has posted top- and bottom-line growth over
the past two years, helped by acquisitions and strength in its U.S.
cleaning and sanitizing unit. The company has been steadily
acquiring smaller assets. In December, it completed its $5.6
billion merger with Nalco Holding Co., a maker of chemicals used in
water treatment, pollution control and energy conservation.
However, the acquisition prompted both Moody's Investors Services
and Standard & Poor's to lower their credit ratings on Ecolab,
citing the deal's debt financing and share repurchases.
Last month, Ecolab unveiled a restructuring plan to streamline
its global business and enhance expected cost savings from its
Nalco acquisition. The company expects to reduce its headcount by
500 positions, mostly in corporate staff jobs as it looks to simply
its supply chain, by the end of next year.
Ecolab reported a profit of $88.7 million, or 34 cents a share,
down from $131.3 million, or 56 cents a share, a year earlier.
Excluding items such as restructuring costs and merger-related
items, per-share earnings rose to 70 cents from 60 cents.
The company's October view called for a profit of 69 cents to 71
cents a share.
Revenue increased 17% to $1.85 billion. Excluding acquisitions
and special charges, Ecolab sales rose 4%. Analysts recently
predicted $1.96 billion.
Gross margin narrowed to 47.6% from 50.3%.
U.S. cleaning and sanitizing segment sales rose 7.6% as
operating income improved 27%. At its international segment, sales
rose 6.1% while earnings improved 5.9%.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287;
nathalie.tadena@dowjones.com