Friday, February 18, 2011

ECL F4Q10 Earnings 02/17/11-(Jim Carroll)

Ecolab Inc., released their 4Q earnings on February 17, 2010. They reported EPS at $.56(+17%) and adjusted EPS at $.60(+9%). Also, adjusted 2010 results were +12% to $2.23 and estimates for 2011 have been forecasted to rise + 11-13 %. Earnings barely trailed estimates of $2.24 and it was above last year’s EPS of $ 1.99.

Net sales were up $ 1575.5 Million in the 4th quarter. Total revenues for the fiscal year of 2010 rose 3 %( year over year) to $6089.7 Million. ECL results were primarily from their Latin America and Asia Pacific sales. As well as, the global lodging and food and beverage businesses.The US Cleaning and Sanitizing business grew 1% to $681 million for the 4Q. ‘Other US Services’ rose $ 111 million. International operations jumped 3 % to $681 million. Overall, Operation Margins grew from 12.9% from 12.5%. Gross Margin increased marginally from 50.1 % to 50.3%.For 2011, ECL predicts their EPS to be between $2.47- $2.53.

ECL was just shy of earnings prompting shares to drop 5.3 % to $ 47.10, on February 17th. In the 4 Q ECL made acquisitions that analysts feel may put the company at risk. There has also been increased competition from Clorox (CLX) and Church and Dwight (CHD). J.P. Morgan even stated that so far in 2011, they are at the ‘bottom’ of the chemical universe. Ecolab, for the first quarter of 2011, estimates EPS to be 42 cents to 45 cents per share, which is below the average estimates of 48 cents a share. Ecolab created a restructuring plan in Europe, which will cut 900 jobs.

ECL plans to improve sales and to offset the cost of raw materials with new product releases and better pricing. In November, ECL acquired O.R solutions and they closed the deal for the Cleantec business from Campbell’s Brothers Ltd. O.R solutions is U.S. developer of surgical fluid warming and cooling systems. The Cleantec business, based out of Australia, is a developer of cleaning and hygiene products. On February 14th Ecolab released a disposable helmet system for use in surgical procedures. They feel that this will give surgeons the protection barrier they need and maintain a level of comfort.

-Jim Carroll

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