Ecolab 1Q Net Skids 44% On Revenue Weakness

   DOW JONES NEWSWIRES 
 

Ecolab Inc.'S (ECL) first-quarter net income plunged 44%, in line with the company's forecast, as falling demand, higher product costs and the stronger dollar hurt results.

Shares fell 2.1% premarket to $36.61 as the cleaning company's revenue fell short of analysts' expectations.

Chairman and Chief Executive Douglas M. Baker Jr. said 2009 will "continue to be a tough year and demand aggressive action from all of us." But he added, "Fortunately, we have large markets with a lot of room to expand our share."

The global recession and stronger dollar has pinched profits for companies that provide cleaning products and services. Ecolab, a provider of cleaning, food safety and health-production products and services, in January said it would cut 1,000 jobs, or 4% of its work force as part of a restructuring that includes product-line changes.

Ecolab reported net income of $57.7 million, or 24 cents a share, down from $103.1 million, or 41 cents a share, a year earlier. The latest quarter included 9 cents in charges from the restructuring and a distributor program change. The company in February forecast earnings, excluding items, of 30 cents to 34 cents, below analysts' expectations at the time.

Net sales dropped 7.5% to $1.35 billion, reflecting the stronger dollar. Analysts polled by Thomson Reuters were recently looking for $1.41 billion.

Gross margins fell to 47.5% from 49.4%.

Revenue for Ecolab's core business, the cleaning and sanitizing unit, fell 5%. Other U.S. revenue fell 3%. International revenue dropped 11%, but rose 3% in constant currency, helped by strong gains in Latin America and Canada.

Looking ahead, Ecolab reaffirmed its 2009 earnings view and projected a second-quarter profit of 46 cents to 50 cents a share. Wall Street's view was 48 cents.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; [e-mail]