) recently announced a definitive agreement to acquire Mexico-based
Quimiproductos S.A. de C.V., a wholly-owned subsidiary of leading
consumer goods company,
). No financial details of the transaction were provided by the
Quimiproductos produces and supplies cleaning, sanitizing and water
treatment goods and services to breweries and beverage companies
located in Mexico. It also has several operations in Central and
South America. In 2011, the company generated revenues of $35
Ecolab has a significant presence in international markets, with
Asia-Pacific and Latin America representing the key growth areas
for the company's overseas operations. We believe that the
acquisition of Quimiproductos should further boost Ecolab's Latin
American Food and Beverage business.
In the reported quarter, revenues from Ecolab's International
Cleaning, Sanitizing & Other Services segment increased 5% on a
constant currency pro forma basis to $796.5 million. On a constant
currency basis, Latin American sales increased 20% in the quarter.
Solid demand in the beverage and brewing markets along with new
accounts and investments in strategic sales areas led to double
digit growth in the Food and Beverage business in this region.
St. Paul, Minnesota-based Ecolab serves the foodservice, food and
beverage processing, healthcare, and hospitality markets both in
the U.S. as well as internationally. We are encouraged by Ecolab's
consistent performance of delivering double-digit earnings growth
despite the challenging business environment.
Ecolab continues to invest in strategic areas such as healthcare,
food, water and energy and global pest elimination to expand its
business. Management is currently emphasizing on product
innovation, sales organization, volume growth, appropriate pricing,
and merger synergies along with rationalizing operating costs.
However, despite strong international exposure, we remain cautious
on Ecolab owing to the aggressive competition from the likes of
Church & Dwight
). Raw material price inflation and higher delivered product cost
continue to be headwinds for the company. We currently have a
Neutral recommendation on Ecolab, which carries a short-term Zacks
#4 Rank (Sell rating).
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