Ecolab Posts 12% Profit Gain

Ecolab Inc. reported a 12% increase in its first-quarter net profit and raised its outlook for the rest of the year, led by double-digit sales growth for its cleaning services in the U.S. and Latin America.

For the three months ended March 31, Ecolab posted net income of $77.9 million (30 cents a share) up from $69.4 million (27 cents a share) a year ago.

The company said that the frequent strong sales in its U.S., Latin American and Asia Pacific businesses enabled it to produce record results in the quarter. Its European operations showed only modest sales gains.

The company noted that sales rose 5% to $1.1 billion but would have risen 8% if measured at fixed currency rates, the company said. It added that prospects for 2006 remain attractive and raised its full-year earnings per share forecast to between $1.40 and $1.43, from its earlier range of $1.38 to $1.42.

After showing high shares at the open, they retreated 1.7% Friday to close at $38.01. The stock, which hit a 52-week high of $40.50 on March 9, is up 6.6% so far this year.

Ecolab stock increased drastically higher in early March after JohnsonDiversey Inc. announced it was moving away from a full-service business model in the U.S. to a distribution-centered model, selling its laundry service, and cutting about 500 jobs.
Sensing an opening for Ecolab and increased pricing power, Morgan Stanley raised its rating on the company to sector outperform from equal-weight.