St. Paul, MN
Sales: $6.1 billion
Sales: $6.1 billion. Net income: $448 million.
Key Personnel: Douglas M. Baker, chairman, president and chief executive officer; Christophe Beck, executive vice president, institutional North America; Larry L. Berger, senior vice president and chief technology officer; Angela M. Busch, vice president, corporate development; James W. Chamberlain, senior vice president, institutional North America field sales; 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, industrial and services, North America sector; Michael A. Hickey, senior vice president, global business development and general manager GCS service; Phillip J. Mason, president, international sector; James A. Miller, president, institutional North America sector; Julie L. Moore, vice president, global marketing and communications; Susan K. Nestegard, executive vice president, global healthcare; Thomas W. Schnack, executive vice president and general manager, food and beverage and water care, North America; Robert P. Tabb, vice president and chief information officer; James H. White, chief information officer.
Major Products: 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 pest 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.
New Products: SolidSense detergent, Formula Foam cleaning system, Quik-Care hand sanitizer, Exterior Fly Bait Station.
Comments: Sales rose 12% last year and net income was up 5%. The U.S. accounted for 51% of sales.
Institutional accounted for 25% of U.S. sales last year. Institutional sales rose 5% in 2008 due to the success of the Apex warewashing system. During the year, the division launched the Ultimate Impact Program, which bundles floor care, housekeeping and laundry solutions.
Kay’s sales jumped 15% thanks to the installation of SolidSense cleaning and sanitation systems into several quick service accounts. Sales were also up with the debut of the Formula Foam Cleaning System.
Healthcare sales nearly tripled following the acquisition of Microtek in 2007. Even when adjusted for the acquisition, healthcare sales surged 11%. During the year, the business expanded its skin care line with the launch of Quik-Care moisturizing gel waterless antimicrobial hand sanitizer.
Textile sales rose 4%, as Ecolab continued to help its customers improve operational efficiency via high performing products such as Performance low-temperature oxygen bleach and Fabric Relaxant, which reduces garment wrinkling.
Following the acquisition of Ecovation, food and beverage sales surged 17%—and sales rose 9% when the acquisition is not included. Key products that helped drive the gain included DryExx, a waterless conveyor lubricant that reduces the need for water consumption on beverage filling lines. Another sales driver was Octave FS, a patent-pending EPA-registered peroxyoctanoic acid-based foaming sanitizer and disinfectant that eliminates the post-rinse process for food contact surfaces.
The recession and higher fuel prices put a big dent in vehicle care sales, which fell 10%. Luckily, Ecolab didn’t sit still waiting for the recession to end. In the meantime,the company launched Blue Coral Beyond Green, a sustainability program that offers a range of products that conserve water and energy.
Sales within the pest elimination business rose 7% with gains in all core segments. During the year, the division launched an improved CheckPoint Rodent Program and Exterior Fly Bait Station.
Finally, GCS Service sales declined 1%.
Within the international business, Europe, the Middle East and Africa (EMEA) accounted for 34% of sales, followed by Asia Pacific (8%), Latin America (4%) and Canada (3%). Business in the EMEA region rose 3%. During the year, the company set up headquarters in Zurich.
Sales in Canada rose 6% on the strength of a number of launches based on sustainable solutions, including CheckPoint Rodent program and DryExx dry lube.
The Asia Pacific region reported an 8% sales gain. Ecolab was a supplier to the Beijing Olympics, a role it has fulfilled in 14 of the 16 previous Olympic Games.
In Latin America, sales jumped 15% as all regions reported double-digit gains. Growth was achieved in food retail and pest elimination segments.
Ecolab is taking aim at air pollution. In April, the company pledged to reduce U.S. greenhouse gas (GHG) emissions by 20% per dollar sales from 2006 to 2012. The firm has committed to the reduction goal as part of the U.S. Environmental Protection Agency’s (EPA’s) Climate Leaders program, which Ecolab joined in 2005. To achieve its goal, Ecolab is focusing on its two largest GHG emissions categories—sales-and-service vehicles and facilities. Facilities include manufacturing plants as well as the corporate headquarters and research and development facilities. The company has developed an energy and GHG reduction program for its facilities and will be moving toward more fuel-efficient vehicles and vehicle service routes, as well as less GHG-intensive fuels when feasible.
Despite all the positives, in January Ecolab announced a restructuring program that is expected to result in pretax savings of $70-80 million. The restructuring program calls for a 4% reduction in the global workforce (about 1000 positions), trimming the number of SKUs by 40% and optimizing formulas to reduce environmental and cost impact, optimizing the supply chain by closing plants and distribution centers and closing two non-strategic healthcare businesses.
It will take a while for these moves to have any impact. In the meantime, for the first quarter of 2009, sales fell 8% to $1.3 billion and net income fell 44% to $57.4 million.