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New Bio-Based Cleaners from Ecolab

Zacks Equity Research

Recently, Ecolab (ECL) launched its latest range of USDA BioPreferred and Green Seal certified bio-based hard surface cleaners. The new product line includes a peroxide multi-surface cleaner, glass cleaner, acid bathroom cleaner and neutral bathroom cleaner.

These offerings will enhance the portfolio of Ecolab’s US Cleaning and Sanitizing segment. Revenues for the segment increased 1% year over year (5% on a pro forma basis) to $760.9 million in the second quarter of 2012. Institutional sales increased 3% year over year on the back of market share gains in the last quarter.

Ecolab witnessed steadfast growth in demand for its products from lodging facilities in the second quarter. As the company’s latest organic solutions are designed for lodging, commercial and facility operations, the new product launches should drive segment sales. Marketing initiatives and better field technology are expected to bolster sales of its latest range of bio-based hard surface cleaners.  

St. Paul, Minnesota-based Ecolab serves the food service, food and beverage processing, healthcare, energy, water treatment and hospitality markets both in the U.S. as well as internationally. The company continues to invest in strategic areas such as health care, food, water and energy and global pest elimination to expand its business. Management’s current emphasis is on product innovation, sales organization, volume growth, appropriate pricing, and merger synergies along with the rationalization of operating costs.

With a background of robust growth, Ecolab is poised to gain momentum via its aggressive strategy of pursuing acquisitions. The company recently announced the acquisition of privately-owned Champion Technologies and its related company Corsicana Technologies for $2.2 billion, in cash and stock. Moreover, Ecolab’s growth has been buoyed by its strong international presence, especially in emerging markets like Asia-Pacific and Latin America.

Despite the impressive strong international exposure, we remain cautious on Ecolab owing to the aggressive competition from the likes of Clorox (CLX) and Church & Dwight (CHD). Raw material price inflation and higher delivered product cost continue to be headwinds for the company.

We currently have a long-term ‘Neutral’ recommendation on Ecolab.

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