Sales: $5.9 billion
$5.9 billion. Net income: $417 million
Douglas M. Baker Jr., chairman president and chief executive officer; Christophe Beck, executive vice president, institutional North America; Lawrence T. Bell, general counsel and secretary; Larry L. Berger, senior vice president and chief technical officer; Angela M. Busch, vice president, corporate development; James W. Chamberlain, senior vice president and general manager, institutional foodservice division; Ching-Meng Chew, vice president and treasurer; John J. Corkrean, vice president and corporate controller; Tracy J. Crocker, senior vice president and general manager, institutional North America hospitality, healthcare and commercial business; Steven L. Fritze, chief financial officer; Robert K. Gifford, senior vice president, global supply chain; Thomas W. Handley, president, global food and beverage; Michael A. Hickey, executive vice president, service sector; Derrick A. Johns, senior vice president, institutional field sales; Phillip J. Mason, president, international sector; Judy M. McNamara, vice president, tax; Michael L. Meyer, senior vice president, human resources; James A. Miller, president, specialty, industrial and services; Susan K. Nestegard, president, global healthcare sector; Thomas W. Schnack, executive vice president and general manager, food and beverage and water care North America; Robert J. Sherwood, senior vice president, institutional global/corporate accounts; Robert P. Tabb, vice president and chief information officer; James H. White, president, EMEA
Institutional—warewashing, laundry, housekeeping, water filtration and conditioning and pool and spa management products; Food and beverage—cleaning and sanitizing products, equipment, systems and services; Pest elimination—commercial elimination and prevention services and grease elimination programs; Kay—cleaning and sanitizing products and services for restaurant and food industries; Professional—floor care, carpet care and personal care products for the commercial, industrial and health care markets
Chillbuster portable patient warming system, Scrub-N-Go scrubber vacuum system, Ecolab Contact Formula-CR, Enviro San and ES-1000, Exelerate ZTF. Acquisitions: Stackhouse surgical helmets and smoke evacuators, ISS pest elimination (UK)
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 circle 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 participates in seven key market segments and none of them represents 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. 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.
Ecolab Lends a Helping Hand
During the year, Ecolab partnered with the Joint Commission’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.
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%.