DOW JONES NEWSWIRES
Ecolab Inc.'S (ECL) first-quarter net income plunged 44%, in
line with the company's forecast, as falling demand, higher product
costs and the stronger dollar hurt results.
Shares fell 2.1% premarket to $36.61 as the cleaning company's
revenue fell short of analysts' expectations.
Chairman and Chief Executive Douglas M. Baker Jr. said 2009 will
"continue to be a tough year and demand aggressive action from all
of us." But he added, "Fortunately, we have large markets with a
lot of room to expand our share."
The global recession and stronger dollar has pinched profits for
companies that provide cleaning products and services. Ecolab, a
provider of cleaning, food safety and health-production products
and services, in January said it would cut 1,000 jobs, or 4% of its
work force as part of a restructuring that includes product-line
changes.
Ecolab reported net income of $57.7 million, or 24 cents a
share, down from $103.1 million, or 41 cents a share, a year
earlier. The latest quarter included 9 cents in charges from the
restructuring and a distributor program change. The company in
February forecast earnings, excluding items, of 30 cents to 34
cents, below analysts' expectations at the time.
Net sales dropped 7.5% to $1.35 billion, reflecting the stronger
dollar. Analysts polled by Thomson Reuters were recently looking
for $1.41 billion.
Gross margins fell to 47.5% from 49.4%.
Revenue for Ecolab's core business, the cleaning and sanitizing
unit, fell 5%. Other U.S. revenue fell 3%. International revenue
dropped 11%, but rose 3% in constant currency, helped by strong
gains in Latin America and Canada.
Looking ahead, Ecolab reaffirmed its 2009 earnings view and
projected a second-quarter profit of 46 cents to 50 cents a share.
Wall Street's view was 48 cents.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com