Thursday, July 30, 2009

Ecolab- Richie Civello

Ecolab came out with earnings on Tuesday.

Revenue of $1.44 billion for the quarter ended June 30 was down 8 percent from $1.57 billion in the same period last year. Excluding restructuring and other items, the St. Paul, Minn.-based company reported income of 50 cents per share; expected earnings were $0.48 cents per share. Reported earnings were $0.41 per share due to restructuring charges and currency exchange rates. Ecolab reduced its 2009 earnings-per-share outlook to a range of $1.96 to $2.02 from a previous forecast of $1.95 to $2.05, excluding anticipated restructuring charges of 21 cents per share to 23 cents per share.

As of today they were upgraded by JPMorgan to “Neutral” from “Underweight”

Ecolab credits new product sales, pricing, cost reduction, and new account gains as the reason for beating earnings. Gross margins increased to 49.7%, up from 49.1%

With the company held view that the markets, while stabilizing, are not going to be enough to make profits go any higher further cost-cutting initiatives are going to be implemented. Along with new product development and increasing efficiencies, this company is taking the right steps.

Management seems fully aware of the economic situation and is taking the right steps to create growth and remain profitable. I affirm this company as a hold for the portfolio as it has been one of the more stable names in the portfolio and should provide consistent and steady returns for us.

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