Ecolab Unit Building New Plant - Analyst Blog


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Global sanitation products major Ecolab Inc. ( ECL ) recently announced that its newly-acquired subsidiary, Nalco Holdings, will soon begin the construction of a dry polymer making factory at its Garyville complex in Louisiana. The dry polymer offerings produced at the facility will be used in the paper, mining and water industries.

The 300,000 square-feet factory will expand the existing Garyville complex to one million square feet. The construction is expected to utilize the services of about 167 full-time laborers. In addition, the company also plans to recruit 22 full-time employees at the facility once the construction is completed in December 2012.

Ecolab zeroed down on this particular complex to further bolster its production efficiencies based on the promising record of Nalco's growth in the Garyville community. Ecolab, through this expansion, also hopes to develop a strong bonding with Nalco employees belonging to this community.

Ecolab's revenues jumped 85% (including the Nalco merger) year over year to $2,810.9 million (a quarterly record) in the most recent quarter. On a fixed currency basis, revenues grew 9% in comparison to the year-ago pro forma fixed currency sales. Growth was triggered by Global Energy and Latin American franchises along with Food & Beverage, U.S. Institutional and Global Water segments.

Ecolab closed, in December 2011, its $8.3 billion acquisition of Illinois-based water treatment services major Nalco Holding. To incorporate the Nalco merger in its results, the company computed pro forma figures based on the consolidated historical results of both Ecolab and Nalco.

Ecolab offers its products and services to the hospitality, foodservice, institutional and industrial markets across more than 160 countries. The company continues to invest in strategic areas such as product innovation, healthcare, water and energy and global pest elimination to spur growth.

Ecolab remains focused on bringing new technologies aimed at reducing food safety risks. Moreover, the company is aggressively pursuing acquisitions to expand into emerging markets. Latin America remains a key growth engine for the company's overseas operations.

Although we are impressed by Ecolab's strong international exposure, we remain cautious about aggressive competition from the likes of Clorox ( CLX ) and Church & Dwight ( CHD ). Also, raw material price inflation and high delivered product costs remain headwinds.

We are currently Neutral on Ecolab, supported by a short-term Zacks #3 Rank (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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