Ecolab Inc. : Ecolab 4Q Net Down 32% On Charges For Nalco Deal
02/28/2012| 03:50pm US/Eastern
--Ecolab CEO pleased with Nalco integration
--Nalco-Ecolab cost savings expected to add 18 cents a share to 2012 profit
--Ecolab sees 2012 adjusted earnings per share of $2.95 to $3.05
(Updates with comments from conference call as well as more details on market and Nalco acquisition beginning in the 1st paragraph.)
By Bob Tita
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; email@example.com
--Nathalie Tadena contributed to this article)