ST. PAUL, Minn., Jan 14, 2009 (BUSINESS WIRE) --
Ecolab Inc. announced that it plans to undertake restructuring and other
cost-saving actions as it streamlines and improves its global business.
These anticipated actions will result in a Special Charge in the fourth
quarter of 2008 as well as a restructuring Special Charge in 2009, and
will produce significant annual cost savings as well as a more efficient
organization.
Restructuring and One-Time Actions
Ecolab plans to undertake changes geared to optimize its workforce,
facilities, product lines and business portfolios in order to adjust to
the current economy while positioning to leverage future growth. These
changes include:
-
A reduction of the company's global workforce by approximately 1,000
positions, or 4 percent. Those whose jobs are eliminated will be
offered severance and outplacement as appropriate.
-
An acceleration of product line initiatives reducing finished goods'
SKU's by 40% and optimizing formulations to reduce environmental and
cost impact.
-
The further optimization of the company's supply chain including the
planned reduction of plant and distribution center locations.
-
The closure of two small non-strategic healthcare businesses and the
write down of investments in an energy management business.
Ecolab expects to record a Special Charge in the fourth quarter of 2008
that will include a pretax charge of approximately $19 million ($18
million after tax) related to the write-down and exiting of the
businesses mentioned above. In 2009, Ecolab expects to incur a pretax
restructuring Special Charge of $65 million - $75 million ($42 million -
$49 million after tax) as a result of these actions. These actions are
expected to provide annualized pretax savings of approximately $70
million - $80 million ($45 million - $50 million after tax, or
approximately $0.20 per share), with pretax savings of approximately $50
million (or about $0.13 per share) to be realized in 2009.
2008 and 2009 outlook
Ecolab continues to expect pro forma diluted earnings per share, which
exclude Special Gains and Charges and discrete tax items for the year
ended December 31, 2008, to be in the $1.85 - $1.87 range, in line with
previously announced expectations. Fourth quarter 2008 earnings,
excluding Special Gains and Charges and discrete tax items, are expected
in the $0.44 - $0.46 range.
The company also continues to expect pro forma diluted earnings per
share, excluding Special Gains and Charges and discrete tax items, for
the year ending December 31, 2009 to rise to the $1.95 - $2.05 per
diluted share range. Pro forma earnings per share in the first half of
2009 are expected to approximate those in the first half of 2008,
reflecting economic, foreign exchange and raw material headwinds, with
second half EPS showing good gains as easing raw material comparisons
and savings from the restructuring and other actions benefit earnings.
Douglas M. Baker, Jr., Ecolab's Chairman, President and Chief Executive
Officer, commented on the announcement, saying: "The restructuring steps
we're taking are designed to better position the company for today's
economic conditions and the future. These steps should lower our overall
operating costs for both the near and long term, reposition our people
and resources to best capitalize on the opportunities we see in our core
Institutional and Food & Beverage businesses, and enable us to focus on
driving our successful global Pest Elimination expansion, Healthcare
Infection Prevention business and Water and Energy growth initiatives.
"While we are confident these steps are the right ones for Ecolab, we
regret that circumstances required associates to leave the company. We
appreciate their contributions and we've worked hard to do this in a
respectful way, but understand the pain it causes as well.
Baker concluded, "Our unwavering commitment is to strengthen our
businesses, our leading market positions, and our opportunities for
future growth. In spite of the tough decisions we've had to make and the
tough economic environment in which we find ourselves, we believe we are
now even better positioned for the future. We have great growth
prospects, a robust business model, the industry's leading customer
service, an opportunity to substantially increase our market share, and
a strong balance sheet. And most importantly, we have a strong and
experienced team ready to drive our business forward."
Ecolab Inc. (NYSE: ECL) is the global leader in cleaning, sanitizing,
food safety and infection prevention products and services. Ecolab
delivers comprehensive programs and services to the foodservice, food
and beverage processing, healthcare, and hospitality markets in more
than 160 countries. More news and information is available at www.ecolab.com.
This news release contains various "Forward-Looking Statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
These include statements concerning our fourth quarter and full year
2008 and 2009 financial and business prospects, including estimated pro
forma diluted earnings per share. These statements, which represent
Ecolab's expectations or beliefs concerning various future events, are
based on current expectations that involve a number of risks and
uncertainties that could cause actual results to differ materially from
those of such Forward-Looking Statements. We caution that undue reliance
should not be placed on Forward-Looking Statements, which speak only as
of the date made.
Risks and uncertainties that may affect operating results and business
performance are set forth under Item 1A of our most recent Form 10-K and
include the vitality of the markets we serve; our ability to develop
competitive advantages through innovation; restraints on pricing
flexibility due to contractual obligations; pressure on operations from
consolidation of customers, vendors or competitors; fluctuations in raw
material costs; the impact of acquisitions, divestitures and investments
to develop business systems or to optimize our business structure; the
costs and effects of complying with laws and regulations relating to the
environment and to the manufacture, storage, distribution, sale and use
of our products; changes in regulations or accounting standards; the
impact of economic factors such as the worldwide economy, interest rates
and foreign currency exposure; the occurrence of litigation or claims,
acts of war, terrorism, severe weather or public health epidemics; the
loss or insolvency of a major customer, supplier or distributor; our
ability to attract and retain high caliber management talent; and other
uncertainties or risks reported from time to time in our reports to the
Securities and Exchange Commission.
Except as may be required under applicable law, we undertake no duty to
update our Forward-Looking Statements.
(ECL-C)
SOURCE: Ecolab Inc.
Ecolab Inc.
Michael J. Monahan, 651-293-2809
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