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Ecolab delivers strong second quarter with sales up 12%
Ecolab has reported a strong second quarter performance led by solid sales gains in its US Cleaning & Sanitising, Asia Pacific and Latin America operations and a strong performance from acquisitions. These combined to more than offset significantly higher delivered product costs and produce a double-digit adjusted earnings per share increase.
Ecolab's reported sales rose 12% to $1.7 billion in the second quarter of 2011; when measured in fixed currencies, sales rose 8%. Adjusted for currency and acquisitions, sales rose 5%. Reported net income attributable to shareholders declined 3% to $126 million. Reported second quarter diluted earnings per share were slightly lower at $0.53.
Second quarter 2011 sales for Ecolab's US Cleaning & Sanitising operations rose 9% to $752 million. Adjusted for acquisitions, sales increased 6%. Income from these operations increased 3% to $143 million, although once adjusted for acquisitions, this income decreased 4%, primarily reflecting the impact of higher delivered product costs which Ecolab believes peaked in North America in the second quarter.
US Other Services sales increased 1% to $116 million in the second quarter. Operating income declined 15% to $16 million as higher service delivery costs more than offset sales gains and cost savings actions.
Sales for Ecolab's International operations, when measured at fixed currency rates, grew 7% to $781 million in the second quarter. Adjusted for acquisitions and divestitures, fixed currency sales increased 5%. Fixed currency operating income increased 26% to $71 million in the second quarter as margins expanded in Ecolab's International regions, led by EMEA. When measured at public currency rates, International sales increased 16% and operating income rose 40%.
Commenting on the quarter, Douglas M. Baker, Jr., Ecolab's Chairman, President and Chief Executive Officer said: "We had a very good second quarter. Our organic sales continued to accelerate, our recent acquisitions are all ahead of their plans, and our innovation and pricing plans also continued to gain traction. This enabled us to offset significant raw material inflation, which peaked for us during this quarter in North America and in total, while Europe will see raw material costs peak in the third quarter before abating on a year-on-year basis. Our work to transform Europe into a higher growth, more efficient and more profitable region is also going well. In spite of much higher than anticipated raw material costs, we remain on target to deliver significant improvement in our operating margin this year as our program to transform Europe operations is delivering ahead of schedule.
"As a result of our strengthening sales and improving margins, we raised our forecast for the year. Our longer term expectations remain bright, and are strengthened as a result of our announced plan to merge with Nalco. This merger will increase our ability to meet our current customer needs, broaden our technology portfolio, and nearly double the market opportunity in front of us. This will increase our growth capabilities on both a top line and bottom line basis. Our strong position has been further improved, and we are in great shape to deliver out-sized results for our shareholders."
28th July 2011