netrashetty
Netra Shetty
Ecolab, Inc. (NYSE: ECL) manufactures and sells commercial cleaning and disinfecting products to companies in the consumer service and health care industries. The company also provides pest control and commercial cooking and refrigeration equipment repair products and services to its customers. Ecolab maintains customer relationships by selling cleaning equipment that makes its customers more efficient, but they must be used with Ecolab's chemical products. The company also trains its sales people to visit their customers often and act as cleaning consultants, identifying areas where customers can improve cleanliness to avoid negative publicity from situations such as food contamination. According to Morning Star, these two strategies have helped Ecolab gain roughly 10% of the $49 billion global market for industrial and institutional cleaning and sanitizing products. Ecolab's market share makes it the largest of the industrial and institutional cleaning and sanitizing products companies.
Many of Ecolab's customers include fast food chains such as McDonald's (MCD), Burger King Holdings (BKC), and Yum! Brands (YUM). Ecolab's products compete with similar products manufactured by Clorox Company (CLX), Church & Dwight Company (CHD) and Zep, Inc (ZEP).
Business Segments
Business Financials
Total revenues for ECL in 2009 were $5.9 billion, a slight decline from the previous year's revenues of $6.1 billion. 2009 marked the first year since 1994 in which total revenues declined, as it had over a decade of steadily increasing revenues. Unsurprisingly, ECL's net income was adversely affected by this decline in revenues. In 2009, ECL's net income was $419 million, compared to $448 million in 2008.
Contents
1 Business Segments
1.1 Business Financials
1.2 U.S. Cleaning & Sanitizing
1.3 U.S. Other Services
1.4 International
2 Key Trends and Forces
2.1 Media attention towards food contamination cases increases the demand for Ecolab's cleaning and sanitation products
2.2 Demand for hotel rooms influences the demand for the products Ecolab makes to clean them
3 Key Competitors
4 References
U.S. Cleaning & Sanitizing
The segment produces and markets cleaning chemicals and equipment to hotels, traditional restaurants, fast food restaurants, food producers, beverage producers, industrial laundries and similar customers. U.S. Cleaning & Sanitizing also provides sterilization and cleaning chemicals to doctors and other health care providers. The segment provides water treatment chemicals that compliment its cleaning chemicals as well as commercial and consumer car care products such as Rain-X. The segment sells cleaning equipment that makes cleaning more efficient but can only be used with U.S. Cleaning & Sanitizing's chemical products, insuring a stable customer base. U.S. Cleaning & Sanitizing sells its products through a team of sales people trained to act as sanitation and cleaning consultants, helping customers avoid food and product contamination. U.S. Cleaning & Sanitizings products compete with similar product sold by Clorox Company (CLX), Church & Dwight Company (CHD) and Zep, Inc (ZEP).
U.S. Other Services
The segment provides pest elimination products and services to hotels, restaurants, healthcare providers, grocery stores, and similar customers. U.S. Other Services also provides commercial cooking and refridgeration equipment repair.
International
Ecolab's International business is modeled after its domestic business. However, Ecolab's International segment focuses more heavily on providing cleaning and sanitizing products to hotels, restaurants and food and beverage producers. Like Ecolab's domestic businesses, Ecolab's International sells specialized cleaning equipment designed to work only with Ecolab chemicals and trains its salespeople to act as consultants, advising customers on the best and newest products to help them operate more efficiently. Ecolab's International products compete with similar product sold by Clorox Company (CLX), Church & Dwight Company (CHD) and Zep, Inc (ZEP).
Key Trends and Forces
Media attention towards food contamination cases increases the demand for Ecolab's cleaning and sanitation products
Between November and December 2006, 71 people in New Jersey, New York, Pennsylvania and Delaware became sick with E. Coli after eating at Taco Bell restaurants.[1] As a result of the E. Coli outbreak, Taco Bell was forced to withdraw green onions from all of its 5,800 stores and close all 15 of its Philadelphia stores temporarily.[2] As other restaurants and fast food chains attempted to prevent similar events from happening at their restaurants, they increased the amount of time and money they spent on cleaning and sanitization. The increased public focus on food sanitization at the end of 2006 resulted in increased demand for Ecolab's U.S. Cleaning & Sanitizing products in 2007. Partially a result of the increased demand, Ecolab's U.S. Cleaning & Sanitizing revenue increased 9% in 2007.[3]
Demand for hotel rooms influences the demand for the products Ecolab makes to clean them
When there is an increase hotel spending, hotels had more rooms rented and therefore had to spend more on cleaning products to maintain them. As a result of the increased spending on cleaning products, Ecolab's sales are positively affected, as it sells these products to hotels. In general, when spending on hotels and other accommodations increases, so does spending on products used to clean them which, in turn, increases Ecolab's U.S. Cleaning and Sanitizing revenues. On the other hand when spending on hotels decreases so does Ecolab's U.S. Cleaning and Sanitizing revenue.
Key Competitors
Clorox Company (CLX) manufactures and markets consumer products such as bleach, cleaners, cat litters, charcoal, sauces, plastic storage bags, plastic garbage bags, and other products. The company's cleaning products compete with those produced by Ecolab's U.S. Cleaning & Sanitizing and International segments.[4]
Church & Dwight Company (CHD) manufactures and markets consumer products such as cleaners, toothpaste, deodorant, condoms and other products. The company also manufactures specialty chemicals, animal nutrition products and commercial cleaning products. The company's commercial cleaning products compete with those manufactured by Ecolab's U.S. Cleaning & Sanitizing and International segments.[5]
Zep, Inc (ZEP) manufactures and sells commercial cleaning products such as cleaners, disinfectants and degreasers. The company also offers pest control products and services. The company's pest control products and services compete with those offered by Ecolab's U.S. Other Services segment while its commercial cleaning products compete with those manufactured by Ecolab's U.S. Cleaning & Sanitizing and International segments.[6]
Henkel was the largest shareholder of Ecolab from 1989, when Henkel and Ecolab formed a European joint venture to combine their commercial cleaning and sanitation operations[7], to 2008, when Henkel sold its holding in 2008 for $30.50 a share, or a total value of $2.2 billion.[8]
Many of Ecolab's customers include fast food chains such as McDonald's (MCD), Burger King Holdings (BKC), and Yum! Brands (YUM). Ecolab's products compete with similar products manufactured by Clorox Company (CLX), Church & Dwight Company (CHD) and Zep, Inc (ZEP).
Business Segments
Business Financials
Total revenues for ECL in 2009 were $5.9 billion, a slight decline from the previous year's revenues of $6.1 billion. 2009 marked the first year since 1994 in which total revenues declined, as it had over a decade of steadily increasing revenues. Unsurprisingly, ECL's net income was adversely affected by this decline in revenues. In 2009, ECL's net income was $419 million, compared to $448 million in 2008.
Contents
1 Business Segments
1.1 Business Financials
1.2 U.S. Cleaning & Sanitizing
1.3 U.S. Other Services
1.4 International
2 Key Trends and Forces
2.1 Media attention towards food contamination cases increases the demand for Ecolab's cleaning and sanitation products
2.2 Demand for hotel rooms influences the demand for the products Ecolab makes to clean them
3 Key Competitors
4 References
U.S. Cleaning & Sanitizing
The segment produces and markets cleaning chemicals and equipment to hotels, traditional restaurants, fast food restaurants, food producers, beverage producers, industrial laundries and similar customers. U.S. Cleaning & Sanitizing also provides sterilization and cleaning chemicals to doctors and other health care providers. The segment provides water treatment chemicals that compliment its cleaning chemicals as well as commercial and consumer car care products such as Rain-X. The segment sells cleaning equipment that makes cleaning more efficient but can only be used with U.S. Cleaning & Sanitizing's chemical products, insuring a stable customer base. U.S. Cleaning & Sanitizing sells its products through a team of sales people trained to act as sanitation and cleaning consultants, helping customers avoid food and product contamination. U.S. Cleaning & Sanitizings products compete with similar product sold by Clorox Company (CLX), Church & Dwight Company (CHD) and Zep, Inc (ZEP).
U.S. Other Services
The segment provides pest elimination products and services to hotels, restaurants, healthcare providers, grocery stores, and similar customers. U.S. Other Services also provides commercial cooking and refridgeration equipment repair.
International
Ecolab's International business is modeled after its domestic business. However, Ecolab's International segment focuses more heavily on providing cleaning and sanitizing products to hotels, restaurants and food and beverage producers. Like Ecolab's domestic businesses, Ecolab's International sells specialized cleaning equipment designed to work only with Ecolab chemicals and trains its salespeople to act as consultants, advising customers on the best and newest products to help them operate more efficiently. Ecolab's International products compete with similar product sold by Clorox Company (CLX), Church & Dwight Company (CHD) and Zep, Inc (ZEP).
Key Trends and Forces
Media attention towards food contamination cases increases the demand for Ecolab's cleaning and sanitation products
Between November and December 2006, 71 people in New Jersey, New York, Pennsylvania and Delaware became sick with E. Coli after eating at Taco Bell restaurants.[1] As a result of the E. Coli outbreak, Taco Bell was forced to withdraw green onions from all of its 5,800 stores and close all 15 of its Philadelphia stores temporarily.[2] As other restaurants and fast food chains attempted to prevent similar events from happening at their restaurants, they increased the amount of time and money they spent on cleaning and sanitization. The increased public focus on food sanitization at the end of 2006 resulted in increased demand for Ecolab's U.S. Cleaning & Sanitizing products in 2007. Partially a result of the increased demand, Ecolab's U.S. Cleaning & Sanitizing revenue increased 9% in 2007.[3]
Demand for hotel rooms influences the demand for the products Ecolab makes to clean them
When there is an increase hotel spending, hotels had more rooms rented and therefore had to spend more on cleaning products to maintain them. As a result of the increased spending on cleaning products, Ecolab's sales are positively affected, as it sells these products to hotels. In general, when spending on hotels and other accommodations increases, so does spending on products used to clean them which, in turn, increases Ecolab's U.S. Cleaning and Sanitizing revenues. On the other hand when spending on hotels decreases so does Ecolab's U.S. Cleaning and Sanitizing revenue.
Key Competitors
Clorox Company (CLX) manufactures and markets consumer products such as bleach, cleaners, cat litters, charcoal, sauces, plastic storage bags, plastic garbage bags, and other products. The company's cleaning products compete with those produced by Ecolab's U.S. Cleaning & Sanitizing and International segments.[4]
Church & Dwight Company (CHD) manufactures and markets consumer products such as cleaners, toothpaste, deodorant, condoms and other products. The company also manufactures specialty chemicals, animal nutrition products and commercial cleaning products. The company's commercial cleaning products compete with those manufactured by Ecolab's U.S. Cleaning & Sanitizing and International segments.[5]
Zep, Inc (ZEP) manufactures and sells commercial cleaning products such as cleaners, disinfectants and degreasers. The company also offers pest control products and services. The company's pest control products and services compete with those offered by Ecolab's U.S. Other Services segment while its commercial cleaning products compete with those manufactured by Ecolab's U.S. Cleaning & Sanitizing and International segments.[6]
Henkel was the largest shareholder of Ecolab from 1989, when Henkel and Ecolab formed a European joint venture to combine their commercial cleaning and sanitation operations[7], to 2008, when Henkel sold its holding in 2008 for $30.50 a share, or a total value of $2.2 billion.[8]
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