UPDATE: Ecolab 4Q Net Down 32% On Charges For Nalco Deal
February 28 2012 - 4:05PM
Dow Jones News
Ecolab Inc.'s (ECL) fourth-quarter earnings fell 32% because of
expenses for the acquisition Nalco Holding Co., but Chairman and
Chief Executive Doug Baker said he's pleased with the chemical
company's contributions to Ecolab.
"Our work to integrate Ecolab and Nalco has gone very well,"
Baker said during a conference call with analysts on Tuesday. "We
like the business. It's a great team. The [Nalco] talent is quite
strong. There are terrific opportunities."
In December, St. Paul, Minn.-based Ecolab completed its $5.6
billion purchase of Nalco, a which makes chemicals used in water
treatment and pollution control. Major customers for Illinois-based
Nalco include oil and natural gas producers, the paper industry and
companies such as mineral processors that consume, extract or
recycle large volumes of water.
The addition of Nalco allows Ecolab to expand its business
activities beyond its legacy of manufacturing commercial-grade
detergents and disinfectants. About half of Ecolab's customers
already use water-treatment chemicals. Ecolab revealed a
restructuring plan last month to streamline its global business and
improve on the cost savings from Nalco.
Ecolab expects to cost-saving synergies from Nalco to reach $75
million this year, up from its earlier estimate of $35 million. The
company expects savings to add about 18 cents a share to Ecolab's
2012 profit. Most of the gains, however, are anticipated later in
2012.
During the fourth quarter, Ecolab's sales of cleaning and
sanitizing supplies in the U.S. rose 7.6% to $733.3 million.
Operating income increased 27% to $144.1 million. International
sales of cleaning and sanitizing products rose 6% to $816.4
million, as operating income climbed 5.9% to $88.3 million.
Overall for the fourth quarter, 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 expenses for Nalco, earnings
improved to 70 cents per share from 60 cents per share a year
earlier. Revenue with Nalco's sales included increased 17% to $1.85
billion.
Ecolab forecast adjusted first-quarter earnings of 46 cents to
49 cents per share, below analysts' for expectations of 54 cents a
share. Ecolab reiterated its January forecast for 2012 earnings per
share of $2.95 to $3.05, while analysts polled by Thomson Reuters
recently expected $3.03.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
--Nathalie Tadena contributed to this article)
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