Ecolab's Arm Opens R&D Center in Russia - Analyst Blog


Ecolab Inc. ( ECL ) revealed that its Russian arm, Master Chemicals Nalco Champion, a chemical solutions and technologies provider, has opened a 21,500-square-foot research and development (R&D) center and regional headquarters in Kazan, Tatarsta. The R&D facility's 4,000 square feet of laboratory space will be utilized for oilfield chemical research and development of chemical solutions for other industries in Russia.

The R&D facility is the outcome of Ecolab's decision to combine its energy services operations across Russia in Kazan in April this year. Currently, Kazan is the heart of Russia's oil and gas industry.

Master Chemicals Nalco Champion, formed by combining Nalco, Champion Technologies and Master Chemicals in April this year, helps Russia's oil and gas industry boost productivity and lower operating costs for every part of the upstream and downstream oil and gas value chain. It also helps its oil and gas clients to improve fluid quality, flow assurance and system integrity.

The new R&D facility will use advanced quality assurance systems to develop products for flow assurance, integrity, separation and water management. Further, it will develop product lines that will help the oil and gas sector to process hydrocarbons, such as heavy crudes, shale oil and offshore resources.

Ecolab posted adjusted earnings per share of 86 cents for the second quarter of 2013, which were 2 cents ahead of the Zacks Consensus Estimate and represented a 19% rise from the year-ago earnings on the back of solid top-line growth and an improved operating margin. The newly acquired Champion Technologies also contributed significantly in the quarter. The results also surpassed the company's previously announced guidance of 81-85 cents.

Revenues grew 13% year over year (14% at constant exchange rate or CER) to $3,337.8 million, a record high for the company. Excluding acquisitions and divestitures, adjusted fixed currency revenues increased 6%. However, revenues were lower than the Zacks Consensus Estimate of $3,410 million.

Following the impressive second quarter results, ECL raised its guidance for 2013, which includes the impact of the acquisition of Champion Technologies. It anticipates 2013 adjusted EPS in a range of $3.48−$3.56 (earlier $3.45−$3.55), representing a 17%−19% (earlier 16%-19%) year-over-year rise. For the third quarter of 2013, ECL anticipates adjusted earnings in a range of $1.00-$1.05 per share, up 15%-21% year over year.

Ecolab currently carries a Zacks Rank #3 (Hold). While we remain on the sidelines regarding Ecolab, companies from the specialty chemicals sector such as Ferro Corporation ( FOE ) with a Zacks Rank #1 (Strong Buy), and Minerals Technologies Inc. ( MTX ) and Sensient Technologies Corporation ( SXT ), both with a Zacks Rank #2 (Buy), are expected to do well.

ECOLAB INC (ECL): Free Stock Analysis Report

FERRO CORP (FOE): Free Stock Analysis Report

MINERAL TECH (MTX): Free Stock Analysis Report

SENSIENT TECH (SXT): Free Stock Analysis Report

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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 The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ECL , FOE , MTX , SXT

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