Ecolab's 2014-second quarter adjusted EPS of $1.03 grew 20% from
last year and inched past the Zacks Consensus Estimate by $0.01.
Year-over-year growth was led by solid top-line growth and
operating margin gains. Revenues grew 7% to $3,568.2 million and
topped the mark. Strong growth in Energy, Specialty and Water
businesses as well as in Latin America and Asia Pacific regions
drove the upside. Ecolab is active on the acquisition front and
continues to explore opportunities to expand in emerging markets to
sustain growth. However, currency fluctuations, challenging
economic and market trends and stiff competition remain significant
headwinds. As a result, we reiterate our Neutral recommendation on
Ecolab and set a target of $115.00.
Ecolab, founded in 1923 and headquartered in St. Paul, Minn., is
a leading provider of cleaning, sanitizing, food safety and
infection prevention products and services. The company serves the
foodservice, food and beverage processing, healthcare, and
hospitality markets both in the U.S. as well as internationally.
The fiscal year at Ecolab coincides with the calendar year.
The company provides cleaning and sanitizing products and
programs. Furthermore, Ecolab's offerings include pest elimination,
maintenance and repair services. These services are enjoyed mainly
by the customers in the foodservice, food and beverage processing,
hospitality, healthcare, government and education, retail, textile
care, commercial facilities management.
Effective from 2013, the company has reorganized its reportable
segments to take into account the Nalco merger and to support its
strategy of global growth. The company's 10 operating units have
been aggregated into 4 reportable segments. They are as
Global Industrial (34.4% of revenues in the first quarter of
2014) consists of the Global Water, Global Food & Beverage,
Global Paper and Global Textile Care operating units.
Global Institutional (30.0%) consists of the Global
Institutional, Global Specialty and Global Healthcare operating
Global Energy (30.4%) consists of the Global Energy operating
Other (5.2%) consists of the Global Pest Elimination and
Equipment Care operating units.
Ecolab is currently pursuing two restructuring plans - Energy
Restructuring Plan and Combined Restructuring Plan. The Energy
Restructuring Plan was undertaken in April 2013, when the company
commenced plans to undertake restructuring and other cost-saving
actions (following the completion of the acquisition of Champion
Technologies) to realize its acquisition-related cost synergies as
well as streamline and strengthen Ecolab's position in the fast
growing global energy market. The plan includes reduction of the
combined business s current global workforce by approximately 500
positions. It also includes reduction of plant and distribution
center locations and product line optimization, as well as the
reduction of other redundant facilities. The Combined Restructuring
Plan is composed of "2011 Restructuring Plan" and "Merger
Restructuring Plan (undertaken in Jan 2012). The "2011
Restructuring Plan involves certain restructuring activities in and
outside Europe. The "Merger Restructuring Plan" is a result of the
merger with Nalco Holding Company, where the company intends to
take restructuring actions related to the reduction of its global
workforce and optimization of its supply chain and office
facilities, including planned reductions of plant and distribution
Ecolab Inc. (ECL): Read the Full Research
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