Sales fell 4% and net income dropped 7% as the recession and
unfavorable exchange rates took a toll on results. Yet, despite a
rough year, company executives insist that a well-diversified Ecolab is well positioned to keep growing as the economy expands.
Speaking at recent J.P Morgan investor meeting, Jim Miller,
president of Ecolab’s specialty and services sector, noted that
while it counts all the major players as its customers, no single
customer accounts for more than 2% of sales and that the top
10 customers make up only 10% of sales.
“Our customer base is very broad and our 20 year strategy is
proven and effective,”noted Miller.“Circle the customer and cir-
cle the globe.”
Miller noted that chemicals only account for 9% of traditional
cleaning costs for I&I customers, while things such as equipment
and equipment repair represent the remaining costs. That’s why
Ecolab has been so aggressive in entering new businesses. Yet,
despite the breadth of its product line, Miller insisted that the
company still has plenty of growth potential. After all, Ecolab
may be twice the size of its nearest competitor (Diversey), but it
holds only 11% of the global I&I market. Moreover, Ecolab par-
ticipates in seven key market segments and none of them rep-
resents more than 25% of the business.
By not relying on any single segment for growth as the U.S.
economy gyrates, Ecolab will keep expanding. Miller pointed
out that for years, the U.S. restaurant industry was obsessed
with adding units. With the recession, however, that obsession
has ebbed and, for the first time since the industry began tracking them, there was a reduction in units last year. As a result,
restaurant owners are focused on improving operations, something where Ecolab can lend a hand.
New Areas of Growth
According to Miller, the company has products and expertise to
help restaurant owners reduce their water and energy usage,
labor costs and equipment repair.
“We have a sustainable business model,” observed Miller,
noting that Ecolab is a leader in concentrated cleaning solutions.
Ecolab Lends a Helping Hand
DURING THE YEAR, Ecolab partnered with the Joint Commis- sion’s new Center for Transforming Healthcare to support a
study to improve hand hygiene. The goal of the study, which will
be conducted at eight leading hospitals and health systems, is to
eliminate poor hand hygiene as a cause of health care-associated
infections (HAIs). An independent, not-for-profit organization, the
joint commission is the leading standards-setting and accrediting
body in healthcare. Since 1951, the commission has maintained
state-of-the-art standards that focus on improving the quality and
safety of care provided by health care organizations.
For example, a 6. 5 lb. block of Apex provides as many washes as
55 gallons of traditional warewashing liquid. Even better, Apex
commands a 20% premium over traditional formulas.
Finding solutions to environmental problems requires innovation and Miller was quick to point out that 42% of Ecolab’s sales
are derived from products that were introduced or significantly
modified during the past five years. Other relatively new areas of
growth for Ecolab include pest elimination and food safety.
What Happened Last Year
Taking a closer look at 2009 sales, the U.S. accounted for 53% of
sales and the institutional business reported a 3% decline in
sales. Sales in the vehicle care division fell 6% due to a double-digit decline in car wash industry sales. Food and beverage and
pest elimination both reported a 1% decline in sales, and the
GCS service division recorded an 11% decline in sales. In contrast, the Kay division recorded a 9% increase in sales led by
new product introductions and better penetration into existing
customer accounts. Textile care reported a 2% gain in sales as
more customers showed interest in Ecolab’s cost-saving programs and services. Health care sales surged 9%, driven by new
product introductions and the addition of new customers.
Outside the U.S., Europe, the Middle East and Africa accounted for 31% of Ecolab’s sales, followed by Asia Pacific (9%),
Latin America (4%) and Canada (3%).
For the first quarter of 2010, sales rose 6% to more than $1.4
billion. U.S. cleaning and sanitizing operations rose 2% to $632
million. Kay led sales results with a strong gain, while healthcare sales were off slightly primarily due to the rebalancing of
H1N1-related product trade inventories. Ecolab’s U.S. cleaning
and sanitizing operating income increased 11% to $113 million.
U.S. other services sales declined 2% to $105 million in the first
quarter. Operating income increased 11% to $15 million. International sales increased 12% and operating income rose 81%.
New York, NY
Sales: $3.5 billion
$3.5 billion for the year ended June 30, 2009.
Bernd Beetz, chief executive officer; Peter Harf, chairman, Coty Inc.;
Sergio Pedreiro, chief financial officer; Michele Scannavini, president, Coty Prestige; Renato Semerari, president Coty Beauty; Dar-ryl McCall, executive vice president, operations, Coty Inc.; Jules