Ecolab cleans up by cleaning up. The company offers cleaning, sanitation, pest-elimination, and maintenance products and services to hospitality, institutional, and industrial customers. Its largest unit, Cleaning and Sanitizing, accounts for nearly half of its sales and serves hotels, schools, and commercial and institutional laundries. Its Kay unit provides cleaning supplies to quick-service restaurants. Other units focus on products for textile care, water care, health care, food and beverage processing, and pest control. Newly acquired unit Nalco makes chemicals used in water treatment for industrial processes. In 2012 Ecolab agreed to buy Houston-based Champion Technologies for $2.2 billion.
The acquisition of Champion Technologies and its related company Corsicana Technologies (collectively referred to as Champion Technologies) helps Ecolab to boost its technology and product strengths in North America and is very complementary to its innovative technology and services in the offshore and international energy markets. The deal is expected to yield $150 million in cost synergies by the end of 2015.
The company provides cleaning and sanitizing programs and products, equipment repair, and pest elimination for markets such as food service, food and beverage processing, healthcare, government and education, and textile care. Ecolab's chemicals and services are used in water treatment, pollution control, energy, steelmaking, papermaking, mining, and other industrial processes. It is also one of the top suppliers of chemical dishwashing products to institutions in the US.
Ecolab now splits its US Cleaning and Sanitizing segment into six operating divisions: Institutional, Food & Beverage, Kay, Healthcare, Textile Care, and Vehicle Care. Its US Other Services segment consists of two units: Pest Elimination and Equipment Care.
The company's International segment includes subsidiaries that operate in 74 countries outside of the US, as well as a joint venture in Venezuela. Its largest International operations, which are similar to those in the US, are in Europe, Asia/Pacific, Latin America, and Canada. Smaller operations are in Africa and the Middle East.
Ecolab serves customers in more than 160 countries and territories worldwide.
The acquisition of Nalco and other companies helped Ecolab deliver a strong performance in 2011. It reported net sales of $6.8 billion, up 12% over that of 2010. Driving that growth were acquisitions, appropriate pricing, and sales gains, which offset the rise in product costs and the company's investments in the business. Sales increased in almost all units except Pest Elimination, which remained flat compared to the previous year. With the acquisition of O.R. Solutions, the company's Healthcare division saw a 28% hike in sales compared to 2010, primarily for hand hygiene and surgical instrument cleaning products.
The company's overall net income, however, dipped about 13% in 2011, to $463 million, due to costs associated with the Nalco acquisition, a reduced tax expense, and other charges.
To keep costs in line with its continued investments, Ecolab has deployed a comprehensive plan to improve efficiencies. Part of the effort includes more shared and outsourced services, a centralization of business functions, and a realignment of the company's supply chain. Ecolab continues to trim its global workforce and office facilities following the merger of Nalco, but it expects to complete those efforts by the end of 2013.
The company began a major financial restructuring of its European operations in 2011, expecting to save about $120 million over a three-year period. The plan includes changes to the division's supply chain, administrative operations, and other functions, as well as a 12% reduction in workforce. As a part of the restructuring, it rolled out its Ecolab Business System platform, a common set of business processes and systems, for its European operations. The EBS platform is designed to streamline the organization, improve efficiency and competitiveness, and more rapidly improve the region's profitability. Ecolab is also implementing EBS in China.
Following its acquisition of Nalco, Ecolab continued restructuring and cutting costs in early 2012, including cutting back on its global workforce and streamlining its supply chain. With the merging of both companies' operations, Ecolab emerged as a global leader in water, hygiene, and energy technologies and services. The company's global reach and expanded line of products and services will enable it to provide total water processing management to food and beverage, hospitality, and laundry customers worldwide.
Ecolab's strategy for growth includes investing organically in its businesses, including equipment used by customers to dispense its cleaning and sanitizing products, as well as in process control and monitoring equipment. The company also invests in innovation, such as a new R&D facility in Shanghai, China. It continues to target key acquisitions to complement its businesses and to focus on key growth areas.
Mergers & Acquisitions
In 2011 Ecolab acquired water treatment company Nalco in a $5.4 billion cash and stock deal. Ecolab is operating the Nalco business under three new segments: Water Services, Paper Services, and Energy Services.
In 2011 Ecolab completed its acquisition of O.R. Solutions, a privately held Virginia company that makes warming and cooling systems for surgical fluids, for $260 million. The business became part of the US Cleaning and Sanitizing segment.
Ecolab purchased the Cleantec business of Campbell Brothers of Brisbane, Australia, for $43 million in 2010. Cleantec is a developer, manufacturer, and marketer of cleaning and hygiene products, primarily for the Australian food and beverage processing, food service, hospitality, and commercial laundry markets.
In 2010 the company also acquired the commercial laundry division of Dober Chemical Corporation, which strengthens Ecolab's US and Canadian Textile Care business. Dober Chemical has annual sales of about $37 million.
Bill Gates and his wife own nearly 11% of Ecolab. – less